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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on FONAR Corporation (NASDAQ:FONR) due to its excellent fundamentals in more than one area. FONR is a financially-healthy company with a a strong 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, read the full report on FONAR here.
Flawless balance sheet and undervalued
FONR delivered a bottom-line expansion of 19% in the prior year, 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 23%, which is what investors like to see! FONR's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that FONR has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. FONR's has produced operating cash levels of 59.85x total debt over the past year, which implies that FONR's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
FONR's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of FONR's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the medical equipment industry, FONR is also trading below its peers, relative to earnings generated. This further reaffirms that FONR is potentially undervalued.
For FONAR, there are three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for FONR’s future growth? Take a look at our free research report of analyst consensus for FONR’s outlook.
- Dividend Income vs Capital Gains: Does FONR 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 FONR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FONR? 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 firstname.lastname@example.org. 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.