Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Frontier Developments plc (LON:FDEV) due to its excellent fundamentals in more than one area. FDEV is a company with great financial health as well as a a great 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 Frontier Developments here.
Flawless balance sheet with outstanding track record
Over the past few years, FDEV has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 23% return to shareholders, which is an notable feat for the company. FDEV'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 FDEV manages its cash and cost levels well, which is a key determinant of the company’s health. Looking at FDEV's capital structure, the company has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
For Frontier Developments, I've compiled three important factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for FDEV’s future growth? Take a look at our free research report of analyst consensus for FDEV’s outlook.
- Valuation: What is FDEV 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 FDEV is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FDEV? 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.