How Kenmare Resources plc (LON:KMR) Could Add Value To Your Portfolio
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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Kenmare Resources plc (LON:KMR) due to its excellent fundamentals in more than one area. KMR is a financially-healthy company with a an impressive track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Kenmare Resources here.
Very undervalued with flawless balance sheet
In the past couple of years, KMR has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. In addition to beating its historical values, KMR also outperformed its industry, which delivered a growth of 14%. This is an notable feat for the company. KMR'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 KMR manages its cash and cost levels well, which is an important determinant of the company’s health. KMR appears to have made good use of debt, producing operating cash levels of 1.04x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
KMR is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of KMR's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, KMR's share price is trading below the group's average. This supports the theory that KMR is potentially underpriced.
Next Steps:
For Kenmare Resources, I've put together three pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for KMR’s future growth? Take a look at our free research report of analyst consensus for KMR’s outlook.
Dividend Income vs Capital Gains: Does KMR 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 KMR as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of KMR? 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 editorial-team@simplywallst.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.
