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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 FutureFuel Corp. (NYSE:FF), it is a financially-robust company with a a great history of performance, trading at a great value. 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 FutureFuel here.
Flawless balance sheet and undervalued
FF 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. Not only did FF outperformed its past performance, its growth also surpassed the Chemicals industry expansion, which generated a 19% earnings growth. This is an optimistic signal for the future. FF is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that FF manages its cash and cost levels well, which is a crucial insight into the health of the company. Investors should not worry about FF’s debt levels because the company has none! This implies that the company is running its operations purely on off equity funding. which is typically normal for a small-cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise.
FF's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if FF'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, FF's share price is trading below the group's average. This bolsters the proposition that FF's price is currently discounted.
For FutureFuel, I've compiled three relevant factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for FF’s future growth? Take a look at our free research report of analyst consensus for FF’s outlook.
- Dividend Income vs Capital Gains: Does FF 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 FF as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FF? 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.