Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on NN Group N.V. (AMS:NN) due to its excellent fundamentals in more than one area. NN is a financially-healthy company with an impressive history high-grade dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, read the full report on NN Group here.
Undervalued with adequate balance sheet and pays a dividend
NN'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 NN has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. NN’s debt-to-equity ratio stands at 34%, which means its debt level is reasonable. This implies that NN has a healthy balance between taking advantage of low cost debt funding as well as sufficient financial flexibility without succumbing to the strict terms of debt. NN's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the insurance industry, NN is also trading below its peers, relative to earnings generated. This supports the theory that NN is potentially underpriced.
NN is considered one of the top dividend payers in the market, and it has also been able to maintain it at a level in which net income is able to cover dividend payments.
For NN Group, I've put together three pertinent aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for NN’s future growth? Take a look at our free research report of analyst consensus for NN’s outlook.
- Historical Performance: What has NN'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 NN? 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.