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Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on FedNat Holding Company (NASDAQ:FNHC) due to its excellent fundamentals in more than one area. FNHC is a financially-healthy company with a a great history high-quality dividend payments, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on FedNat Holding here.
Good value with adequate balance sheet and pays a dividend
FNHC’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. FNHC’s debt-to-equity ratio stands at 20%, which means its debt level is reasonable. This means that FNHC’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt. FNHC’s share price is trading below its true value according to its price-to-earnings ratio of 7.8x compared to its industry as well as the wider stock market, which means it is relatively cheaper than its peers.
FNHC’s profit levels are sufficient enough to reinvest and payout as dividends, which has been consistently higher than the low-risk savings rate, compensating investors for taking the risk of holding a stock as opposed to riskless assets. However, it is important to remember that dividend yields are a function of stock prices and corporate profits, which can be volatile.
For FedNat Holding, I’ve compiled three relevant factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for FNHC’s future growth? Take a look at our free research report of analyst consensus for FNHC’s outlook.
- Historical Performance: What has FNHC’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FNHC? 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. On rare occasion, data errors may occur. Thank you for reading.