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Looking At OFX Group Limited (ASX:OFX) From All Angles

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Bruce Howe
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Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of OFX Group Limited (ASX:OFX), it is a financially-sound company with an impressive track record and a buoyant growth outlook. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, read the full report on OFX Group here.

Flawless balance sheet with reasonable growth potential

Over the past year, OFX has grown its earnings by 8.6%, with its most recent figure exceeding its annual average over the past five years. This strong performance generated a robust double-digit return on equity of 28%, which paints a buoyant picture for the company.

ASX:OFX Future Profit February 4th 19
ASX:OFX Future Profit February 4th 19

OFX is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that OFX manages its cash and cost levels well, which is a crucial insight into the health of the company. Investors should not worry about OFX’s debt levels because the company has none! It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise.

ASX:OFX Historical Debt February 4th 19
ASX:OFX Historical Debt February 4th 19

Next Steps:

For OFX Group, there are three essential factors you should look at:

  1. Valuation: What is OFX 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 OFX is currently mispriced by the market.

  2. Dividend Income vs Capital Gains: Does OFX 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 OFX as an investment.

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