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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 SSAB AB (publ) (STO:SSAB A), it is a financially-sound company with an impressive track record of performance, trading at a discount. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on SSAB here.
Flawless balance sheet, undervalued and pays a dividend
SSAB A delivered a bottom-line expansion of 69% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did SSAB A outperformed its past performance, its growth also surpassed the Metals and Mining industry expansion, which generated a 6.5% earnings growth. This paints a buoyant picture for the company. SSAB A is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that SSAB A has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. SSAB A seems to have put its debt to good use, generating operating cash levels of 0.45x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
SSAB A's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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. Also, relative to the rest of its peers with similar levels of earnings, SSAB A's share price is trading below the group's average. This further reaffirms that SSAB A is potentially undervalued.
For SSAB, there are three important aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for SSAB A’s future growth? Take a look at our free research report of analyst consensus for SSAB A’s outlook.
- Dividend Income vs Capital Gains: Does SSAB A 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 SSAB A as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SSAB A? 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.