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 Saracen Mineral Holdings Limited (ASX:SAR), it is a financially-robust company with an impressive track record and an optimistic future outlook. 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 Saracen Mineral Holdings here.
Flawless balance sheet with high growth potential
Investors in search for stocks with room to flourish should look no further than SAR, with its expected earnings growth of 35% underlying the notable 27% return on equity over the next few years leading up to 2022. Over the past few years, SAR has demonstrated a proven ability to generate robust returns of 12% Unsurprisingly, SAR surpassed the industry return of 9.1%, which gives us more confidence of the company's capacity to drive earnings going forward.
SAR's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. Looking at SAR's capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is rather impressive for a AU$3.7b market 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.
For Saracen Mineral Holdings, I've put together three essential aspects you should look at:
- Valuation: What is SAR 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 SAR is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does SAR 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 SAR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SAR? 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.