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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Prime Securities Limited (NSE:PRIMESECU) due to its excellent fundamentals in more than one area. PRIMESECU is a financially-sound company with a strong history of performance, trading at a great value. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Prime Securities here.
Excellent balance sheet and good value
PRIMESECU has a strong track record of performance. In the previous year, PRIMESECU delivered an impressive double-digit return of 48%. Unsurprisingly, PRIMESECU surpassed the Capital Markets industry return of 3.5%, which gives us more confidence of the company's capacity to drive earnings going forward. PRIMESECU is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that PRIMESECU has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. PRIMESECU appears to have made good use of debt, producing operating cash levels of 1.7x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
PRIMESECU's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if PRIMESECU's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, PRIMESECU's share price is trading below the group's average. This bolsters the proposition that PRIMESECU's price is currently discounted.
For Prime Securities, I've put together three pertinent factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for PRIMESECU’s future growth? Take a look at our free research report of analyst consensus for PRIMESECU’s outlook.
- Dividend Income vs Capital Gains: Does PRIMESECU 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 PRIMESECU as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of PRIMESECU? 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 email@example.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.