Chongqing Machinery & Electric Co., Ltd. (HKG:2722) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of 2722, it is a company that has been able to sustain great financial health, trading at an attractive share price. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Chongqing Machinery & Electric here.
Excellent balance sheet and good value
2722 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that 2722 has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. With a debt-to-equity ratio of 36%, 2722’s debt level is acceptable. This means that 2722’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt. 2722 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the industrials industry, 2722 is also trading below its peers, relative to earnings generated. This further reaffirms that 2722 is potentially undervalued.
For Chongqing Machinery & Electric, there are three fundamental aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for 2722’s future growth? Take a look at our free research report of analyst consensus for 2722’s outlook.
- Historical Performance: What has 2722'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 2722? 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.