I've been keeping an eye on rhipe Limited (ASX:RHP) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe RHP has a lot to offer. Basically, it is a financially-sound company with an impressive track record and an optimistic growth outlook. 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 rhipe here.
Exceptional growth potential with flawless balance sheet
RHP is an attractive stock for growth-seeking investors, with an expected earnings growth of 29% in the upcoming year. This growth in the bottom-line is bolstered by an equally impressive top-line expansion over the same period, which is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. Over the past few years, RHP has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did RHP outperformed its past performance, its growth also surpassed the IT industry expansion, which generated a 61% earnings growth. This is an optimistic signal for the future.
RHP is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that RHP has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Looking at RHP'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. RHP 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 rhipe, I've compiled three relevant factors you should further research:
- Valuation: What is RHP 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 RHP is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does RHP 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 RHP as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of RHP? 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.