Does The Data Make BlueScope Steel Limited (ASX:BSL) An Attractive Investment?
I’ve been keeping an eye on BlueScope Steel Limited (ASX:BSL) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe BSL has a lot to offer. Basically, it is a financially-healthy company with a an impressive track record of performance, trading at a great value. Below is a brief commentary 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 BlueScope Steel here.
Flawless balance sheet with outstanding track record
In the past couple of years, BSL 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 24% return to shareholders, which is an notable feat for the company. BSL’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that BSL has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. BSL seems to have put its debt to good use, generating operating cash levels of 1.3x 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.
BSL 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 BSL’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, BSL’s share price is trading below the group’s average. This supports the theory that BSL is potentially underpriced.
Next Steps:
For BlueScope Steel, there are three relevant factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for BSL’s future growth? Take a look at our free research report of analyst consensus for BSL’s outlook.
Dividend Income vs Capital Gains: Does BSL 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 BSL as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BSL? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
