Covenant Transportation Group Inc (NASDAQ:CVTI) 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 CVTI, it is a financially-robust company with a a strong track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my high-level commentary, read the full report on Covenant Transportation Group here.
Undervalued with solid track record
CVTI delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 21.79%, which is an notable feat for the company. CVTI’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 CVTI manages its cash and cost levels well, which is a key determinant of the company’s health. CVTI seems to have put its debt to good use, generating operating cash levels of 0.37x 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.
CVTI 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 transportation industry, CVTI is also trading below its peers, relative to earnings generated. This further reaffirms that CVTI is potentially undervalued.
For Covenant Transportation Group, I’ve compiled three essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for CVTI’s future growth? Take a look at our free research report of analyst consensus for CVTI’s outlook.
- Dividend Income vs Capital Gains: Does CVTI 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 CVTI as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CVTI? 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.