Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Empired Limited (ASX:EPD) due to its excellent fundamentals in more than one area. EPD is a financially-healthy company with a great 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 Empired here.
Flawless balance sheet and good value
EPD delivered a bottom-line expansion of 59% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did EPD outperformed its past performance, its growth also surpassed the IT industry expansion, which generated a 51% earnings growth. This is what investors like to see! EPD'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 suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. EPD appears to have made good use of debt, producing operating cash levels of 0.5x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
EPD's shares are now trading at a price below its true value based on its PE ratio of 8.68x, compared to the industry and wider stock market ratio, so potential investors can purchase the stock below its value.
For Empired, I've compiled three relevant aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for EPD’s future growth? Take a look at our free research report of analyst consensus for EPD’s outlook.
- Dividend Income vs Capital Gains: Does EPD 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 EPD as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of EPD? 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.