Attractive stocks have exceptional fundamentals. In the case of BG Staffing, Inc. (NYSEMKT:BGSF), there's is a financially-healthy company with a great history of performance, trading at a discount. 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 BG Staffing here.
Flawless balance sheet with solid track record
Over the past year, BGSF has grown its earnings by 64%, 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 paints a buoyant picture for the company. BGSF'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 BGSF has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. BGSF's has produced operating cash levels of 1.32x total debt over the past year, which implies that BGSF's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
BGSF's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. 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, BGSF's share price is trading below the group's average. This further reaffirms that BGSF is potentially undervalued.
For BG Staffing, I've put together three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for BGSF’s future growth? Take a look at our free research report of analyst consensus for BGSF’s outlook.
- Dividend Income vs Capital Gains: Does BGSF 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 BGSF as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BGSF? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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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.