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Is Knorr-Bremse Aktiengesellschaft (ETR:KBX) Potentially Underrated?

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Knorr-Bremse Aktiengesellschaft (ETR:KBX) 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 KBX, it is a company with great financial health as well as a a great history of performance. Below is a brief commentary 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 Knorr-Bremse here.

Solid track record with adequate balance sheet

KBX delivered a bottom-line expansion of 11% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 36% return to shareholders, which paints a buoyant picture for the company. KBX'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 indicates that KBX has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. KBX appears to have made good use of debt, producing operating cash levels of 0.42x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

XTRA:KBX Income Statement, July 2nd 2019
XTRA:KBX Income Statement, July 2nd 2019

Next Steps:

For Knorr-Bremse, I've put together three key aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for KBX’s future growth? Take a look at our free research report of analyst consensus for KBX’s outlook.

  2. Valuation: What is KBX 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 KBX is currently mispriced by the market.

  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of KBX? 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.