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A Holistic Look At Electrocomponents plc (LON:ECM)

Luis Baughman

Electrocomponents plc (LON:ECM) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of ECM, it is a company with great financial health as well as a a strong history of performance. Below, I’ve touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, read the full report on Electrocomponents here.

Outstanding track record with adequate balance sheet

In the previous year, ECM has ramped up its bottom line by 55%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 30%, which is an notable feat for the company. ECM’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that ECM manages its cash and cost levels well, which is a key determinant of the company’s health. ECM’s has produced operating cash levels of 0.54x total debt over the past year, which implies that ECM’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

LSE:ECM Income Statement Export January 29th 19

Next Steps:

For Electrocomponents, I’ve put together three fundamental aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for ECM’s future growth? Take a look at our free research report of analyst consensus for ECM’s outlook.
  2. Valuation: What is ECM 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 ECM is currently mispriced by the market.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ECM? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.