I’ve been keeping an eye on Hennessy Advisors Inc (NASDAQ:HNNA) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe HNNA has a lot to offer. Basically, it is a financially-healthy company with a a great track record of performance, trading at a great value. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my high-level commentary, read the full report on Hennessy Advisors here.
Undervalued with solid track record and pays a dividend
HNNA has a strong track record of performance. In the previous year, HNNA delivered an impressive double-digit return of 31.33% Unsurprisingly, HNNA surpassed the Capital Markets industry return of 14.20%, which gives us more confidence of the company’s capacity to drive earnings going forward. HNNA is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that HNNA has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. HNNA appears to have made good use of debt, producing operating cash levels of 0.81x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
HNNA’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 HNNA’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, HNNA’s share price is trading below the group’s average. This bolsters the proposition that HNNA’s price is currently discounted.
For Hennessy Advisors, there are three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for HNNA’s future growth? Take a look at our free research report of analyst consensus for HNNA’s outlook.
- Dividend Income vs Capital Gains: Does HNNA 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 HNNA as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of HNNA? 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 pass 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.