U.S. Markets close in 6 mins

Brief Commentary On Anglo American plc's (LON:AAL) Fundamentals

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Attractive stocks have exceptional fundamentals. In the case of Anglo American plc (LON:AAL), there's is a company that has been able to sustain great financial health, trading at an attractive share price. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Anglo American here.

Excellent balance sheet and good value

AAL is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. AAL seems to have put its debt to good use, generating operating cash levels of 0.78x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. AAL is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of AAL's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, AAL's share price is trading below the group's average. This further reaffirms that AAL is potentially undervalued.

LSE:AAL Intrinsic value, June 27th 2019

Next Steps:

For Anglo American, I've compiled three relevant factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for AAL’s future growth? Take a look at our free research report of analyst consensus for AAL’s outlook.
  2. Historical Performance: What has AAL's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AAL? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.