Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on Strongbridge Biopharma plc (NASDAQ:SBBP) due to its excellent fundamentals in more than one area. SBBP is a financially-robust company with a a buoyant growth outlook, not yet priced into the stock. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Strongbridge Biopharma here.
Very undervalued with flawless balance sheet
SBBP’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of SBBP’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the pharmaceuticals industry, SBBP is also trading below its peers, relative to earnings generated. This further reaffirms that SBBP is potentially undervalued.
SBBP is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that SBBP manages its cash and cost levels well, which is an important determinant of the company’s health. Investors should not worry about SBBP’s debt levels because the company has none! It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
For Strongbridge Biopharma, there are three essential aspects you should look at:
- Historical Performance: What has SBBP’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.
- Dividend Income vs Capital Gains: Does SBBP 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 SBBP as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SBBP? 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.