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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 TCM Group A/S (CPH:TCM), it is a financially-sound company with a a great history of performance, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, read the full report on TCM Group here.
Outstanding track record and good value
Over the past few years, TCM has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. This strong performance generated a robust double-digit return on equity of 25%, which is what investors like to see! TCM's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that TCM has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. TCM seems to have put its debt to good use, generating operating cash levels of 0.55x 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.
TCM is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if TCM's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, TCM's share price is trading below the group's average. This bolsters the proposition that TCM's price is currently discounted.
For TCM Group, I've compiled three relevant factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for TCM’s future growth? Take a look at our free research report of analyst consensus for TCM’s outlook.
- Dividend Income vs Capital Gains: Does TCM 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 TCM as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TCM? 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.