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Why Fundamental Investors Might Love BSA Limited (ASX:BSA)

Simply Wall St

BSA Limited (ASX:BSA) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of BSA, it is a financially-sound company with an impressive track record and a buoyant growth outlook. 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 BSA here.

Flawless balance sheet with solid track record

Over the past few years, BSA has demonstrated a proven ability to generate robust returns of 30%. Not surprisingly, BSA outperformed its industry which returned 17%, giving us more conviction of the company's capacity to drive bottom-line growth going forward.

ASX:BSA Past and Future Earnings, October 14th 2019

BSA's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that BSA has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. BSA seems to have put its debt to good use, generating operating cash levels of 10.39x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.

ASX:BSA Historical Debt, October 14th 2019

Next Steps:

For BSA, I've put together three key factors you should further examine:

  1. Valuation: What is BSA 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 BSA is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does BSA 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 BSA as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BSA? 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 editorial-team@simplywallst.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.