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 Computershare Limited (ASX:CPU), it is a financially-sound company with a great track record and an optimistic future outlook. 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, read the full report on Computershare here.
Solid track record with reasonable growth potential
Over the past year, CPU has grown its earnings by 13%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 23% return to shareholders, which paints a buoyant picture for the company.
CPU’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 implies that CPU manages its cash and cost levels well, which is a key determinant of the company’s health. CPU appears to have made good use of debt, producing operating cash levels of 0.35x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
For Computershare, there are three essential factors you should look at:
- Valuation: What is CPU 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 CPU is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does CPU 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 CPU as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CPU? 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 firstname.lastname@example.org.