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Does The Data Make Fountain Asset Corp. (CVE:FA) An Attractive Investment?

Simply Wall St

Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Fountain Asset Corp. (CVE:FA) due to its excellent fundamentals in more than one area. FA is a company with great financial health as well as a a great history of performance. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, read the full report on Fountain Asset here.

Flawless balance sheet with solid track record

In the past couple of years, FA has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 32%, which paints a buoyant picture for the company. FA is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. Looking at FA's capital structure, the company has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is typically normal for a small-cap company. FA has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.

TSXV:FA Income Statement, April 11th 2019

Next Steps:

For Fountain Asset, there are three relevant aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for FA’s future growth? Take a look at our free research report of analyst consensus for FA’s outlook.
  2. Valuation: What is FA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FA is currently mispriced by the market.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FA? 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.