Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Vicor Corporation (NASDAQ:VICR) due to its excellent fundamentals in more than one area. VICR is a financially-healthy company with an impressive track record and a excellent growth outlook. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Vicor here.
Flawless balance sheet with solid track record
VICR is an attractive stock for growth-seeking investors, with an expected earnings growth of 37% in the upcoming year, supported by its outstanding capacity to churn out cash from operating activities, which is predicted to ramp up by 64% next year. This indicates that earnings is driven by top-line activity rather than purely unsustainable cost-reduction initiatives. Over the past few years, VICR has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. In addition to beating its historical values, VICR also outperformed its industry, which delivered a growth of 27%. This is what investors like to see!
VICR is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that VICR has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Investors should not worry about VICR’s debt levels because the company has none! This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise.
For Vicor, there are three key aspects you should further examine:
- Valuation: What is VICR 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 VICR is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does VICR 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 VICR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of VICR? 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.