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Should You Consider Best of the Best PLC (LON:BOTB)?

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Attractive stocks have exceptional fundamentals. In the case of Best of the Best PLC (LON:BOTB), there's is a financially-healthy company with an impressive track record of performance, trading at a great value. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, read the full report on Best of the Best here.

Flawless balance sheet with outstanding track record

In the past couple of years, BOTB has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 299% return to shareholders, which is an optimistic signal for the future. BOTB is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that BOTB manages its cash and cost levels well, which is a key determinant of the company’s health. Looking at BOTB's capital structure, the company has no debt on its balance sheet. 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.

AIM:BOTB Income Statement, July 19th 2019
AIM:BOTB Income Statement, July 19th 2019

BOTB 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 BOTB'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, BOTB's share price is trading below the group's average. This further reaffirms that BOTB is potentially undervalued.

AIM:BOTB Price Estimation Relative to Market, July 19th 2019
AIM:BOTB Price Estimation Relative to Market, July 19th 2019

Next Steps:

For Best of the Best, I've compiled three important aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for BOTB’s future growth? Take a look at our free research report of analyst consensus for BOTB’s outlook.

  2. Dividend Income vs Capital Gains: Does BOTB return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from BOTB as an investment.

  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BOTB? 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.

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