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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on HMS Holdings Corp. (NASDAQ:HMSY) due to its excellent fundamentals in more than one area. HMSY is a financially-healthy company with a strong history and a buoyant growth outlook. 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, take a look at the report on HMS Holdings here.
Flawless balance sheet with solid track record
Over the past year, HMSY has grown its earnings by 52%, with its most recent figure exceeding its annual average over the past five years. Not only did HMSY outperformed its past performance, its growth also exceeded the Healthcare Services industry expansion, which generated a 22% earnings growth. This is an notable feat for the company.
HMSY's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. HMSY seems to have put its debt to good use, generating operating cash levels of 0.46x 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.
For HMS Holdings, there are three essential aspects you should look at:
- Valuation: What is HMSY worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HMSY is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does HMSY 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 HMSY as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of HMSY? 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.