Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Neopost S.A. (EPA:NEO) due to its excellent fundamentals in more than one area. NEO is a company that has been able to sustain great financial health, trading at an attractive share price. Below, I've touched on some key aspects you should know on a high level. For those interested in digging a bit deeper into my commentary, take a look at the report on Neopost here.
Undervalued with excellent balance sheet
NEO'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 NEO manages its cash and cost levels well, which is an important determinant of the company’s health. NEO seems to have put its debt to good use, generating operating cash levels of 0.28x 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. NEO's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if NEO's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, NEO's share price is trading below the group's average. This further reaffirms that NEO is potentially undervalued.
For Neopost, I've put together three fundamental aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for NEO’s future growth? Take a look at our free research report of analyst consensus for NEO’s outlook.
- Historical Performance: What has NEO's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of NEO? 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.