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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of China Communications Construction Company Limited (HKG:1800), 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 China Communications Construction here.
Very undervalued with adequate balance sheet
1800's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that 1800 manages its cash and cost levels well, which is a crucial insight into the health of the company. 1800’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps 1800 expand. 1800's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if 1800's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the construction industry, 1800 is also trading below its peers, relative to earnings generated. This further reaffirms that 1800 is potentially undervalued.
For China Communications Construction, I've put together three relevant factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 1800’s future growth? Take a look at our free research report of analyst consensus for 1800’s outlook.
- Historical Performance: What has 1800'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 1800? 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 firstname.lastname@example.org. 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.