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Cheetah Mobile Inc. (NYSE:CMCM) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of CMCM, it is a company that has been able to sustain great financial health, trading at an attractive share price. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Cheetah Mobile here.
Flawless balance sheet and undervalued
CMCM's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that CMCM manages its cash and cost levels well, which is an important determinant of the company’s health. Investors should not worry about CMCM’s debt levels because the company has none! This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise. CMCM's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of CMCM'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, CMCM's share price is trading below the group's average. This supports the theory that CMCM is potentially underpriced.
For Cheetah Mobile, I've put together three fundamental factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CMCM’s future growth? Take a look at our free research report of analyst consensus for CMCM’s outlook.
- Historical Performance: What has CMCM'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.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CMCM? 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 email@example.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.