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 Tivity Health, Inc. (NASDAQ:TVTY), it is a financially-robust company with a an impressive track record of performance, trading at a great value. Below, I’ve touched on some key aspects you should know on a high level. If you’re interested in understanding beyond my broad commentary, take a look at the report on Tivity Health here.
Outstanding track record and undervalued
Over the past year, TVTY has grown its earnings by 60%, 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 27%. which paints a buoyant picture for the company. With a debt-to-equity ratio of 8.3%, TVTY’s debt level is reasonable. This indicates a good balance between taking advantage of low cost funding through debt financing, but having enough financial flexibility and headroom to grow debt in the future. TVTY’s has produced operating cash levels of 3.55x total debt over the past year, which implies that TVTY’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
TVTY’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, TVTY’s share price is trading below the group’s average. This supports the theory that TVTY is potentially underpriced.
For Tivity Health, there are three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for TVTY’s future growth? Take a look at our free research report of analyst consensus for TVTY’s outlook.
- Dividend Income vs Capital Gains: Does TVTY 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 TVTY as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TVTY? 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.