Attractive stocks have exceptional fundamentals. In the case of Ternium S.A. (NYSE:TX), there’s is a financially-healthy company with a a great track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Ternium here.
Flawless balance sheet, undervalued and pays a dividend
In the previous year, TX has ramped up its bottom line by 70%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 22%, which paints a buoyant picture for the company. TX is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that TX manages its cash and cost levels well, which is a crucial insight into the health of the company. TX seems to have put its debt to good use, generating operating cash levels of 0.82x 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.
TX’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 TX’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the metals and mining industry, TX is also trading below its peers, relative to earnings generated. This further reaffirms that TX is potentially undervalued.
For Ternium, there are three fundamental factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for TX’s future growth? Take a look at our free research report of analyst consensus for TX’s outlook.
- Dividend Income vs Capital Gains: Does TX 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 TX as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TX? 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.