Penumbra, Inc. (NYSE:PEN) 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 PEN, it is a financially-healthy company with a strong history and a buoyant future 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 Penumbra here.
Flawless balance sheet with reasonable growth potential
Investors in search for stocks with room to flourish should look no further than PEN, with its expected earinngs growth of 49%, made up of high-quality, operational cash from its core business, which is expected to increase by 51% next year. This indicates a high-quality bottom-line expansion, as opposed to those driven by unsustainable cost-cutting activities. In the previous year, PEN has ramped up its bottom line by 42%, with its latest earnings level surpassing its average level over the last five years. Not only did PEN outperformed its past performance, its growth also surpassed the Medical Equipment industry expansion, which generated a 33% earnings growth. This is an notable feat for the company.
PEN is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that PEN manages its cash and cost levels well, which is a key determinant of the company’s health. Investors should not worry about PEN’s debt levels because the company has none! This means it is running its business only on equity capital funding, which is rather impressive for a US$4.5b market cap company. PEN has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
For Penumbra, I've compiled three essential factors you should further research:
- Valuation: What is PEN 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 PEN is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does PEN 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 PEN as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of PEN? 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.