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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 Nanometrics Incorporated (NASDAQ:NANO), it is a financially-sound company with a a strong history of performance, trading at a great value. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on Nanometrics here.
Flawless balance sheet and undervalued
NANO delivered a bottom-line expansion of 90% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did NANO outperformed its past performance, its growth also surpassed the Semiconductor industry expansion, which generated a 49% earnings growth. This is what investors like to see! NANO’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that NANO has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. Looking at NANO’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.
NANO’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of NANO’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, NANO’s share price is trading below the group’s average. This bolsters the proposition that NANO’s price is currently discounted.
For Nanometrics, I’ve compiled three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for NANO’s future growth? Take a look at our free research report of analyst consensus for NANO’s outlook.
- Dividend Income vs Capital Gains: Does NANO 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 NANO as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of NANO? 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 email@example.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.