Why Redrow plc (LON:RDW) Could Have A Place In Your Portfolio
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
I've been keeping an eye on Redrow plc (LON:RDW) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe RDW has a lot to offer. Basically, it is a financially-healthy company with an impressive 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 Redrow here.
Flawless balance sheet, good value and pays a dividend
Over the past few years, RDW has demonstrated a proven ability to generate robust returns of 20%. Not surprisingly, RDW outperformed its industry which returned 16%, giving us more conviction of the company's capacity to drive bottom-line growth going forward. RDW'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 implies that RDW manages its cash and cost levels well, which is a key determinant of the company’s health. RDW's has produced operating cash levels of 243x total debt over the past year, which implies that RDW's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
RDW is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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. Compared to the rest of the consumer durables industry, RDW is also trading below its peers, relative to earnings generated. This bolsters the proposition that RDW's price is currently discounted.
Next Steps:
For Redrow, I've put together three pertinent factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for RDW’s future growth? Take a look at our free research report of analyst consensus for RDW’s outlook.
Dividend Income vs Capital Gains: Does RDW 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 RDW as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of RDW? 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.
