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Tatton Asset Management plc (LON:TAM): Commentary On Fundamentals

Simply Wall St

Tatton Asset Management plc (LON:TAM) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of TAM, it is a financially-sound company with a strong track record 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, take a look at the report on Tatton Asset Management here.

Flawless balance sheet with solid track record

Investors in search for stocks with room to flourish should look no further than TAM, with its expected earnings growth of 24% which is expected to flow into an impressive return on equity of 46% over the next couple of years. Over the past year, TAM has grown its earnings by 99%, with its most recent figure exceeding its annual average over the past five years. This illustrates a strong track record, leading to a satisfying return on equity of 32%. which is what investors like to see!

AIM:TAM Past and Future Earnings, August 14th 2019

TAM is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that TAM manages its cash and cost levels well, which is an important determinant of the company’s health. Looking at TAM's capital structure, the company has no debt on its balance sheet. This means it is running its business only on equity capital funding, 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.

AIM:TAM Historical Debt, August 14th 2019

Next Steps:

For Tatton Asset Management, I've compiled three pertinent factors you should further examine:

  1. Valuation: What is TAM 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 TAM is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does TAM 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 TAM as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TAM? 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 editorial-team@simplywallst.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.