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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Livestock Improvement Corporation Limited (NZSE:LIC), it is a financially-robust company with a a strong 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, read the full report on Livestock Improvement here.
Undervalued with excellent balance sheet
In the previous year, LIC has ramped up its bottom line by 62%, with its latest earnings level surpassing its average level over the last five years. Not only did LIC outperformed its past performance, its growth also exceeded the Food industry expansion, which generated a 16% earnings growth. This paints a buoyant picture for the company. LIC is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that LIC manages its cash and cost levels well, which is a key determinant of the company’s health. LIC appears to have made good use of debt, producing operating cash levels of 2.02x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
LIC's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of LIC's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, LIC's share price is trading below the group's average. This bolsters the proposition that LIC's price is currently discounted.
For Livestock Improvement, I've put together three pertinent aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for LIC’s future growth? Take a look at our free research report of analyst consensus for LIC’s outlook.
- Dividend Income vs Capital Gains: Does LIC 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 LIC as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LIC? 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.