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 Arkema S.A. (EPA:AKE), it is a financially-sound company with a a strong track record of performance, trading at a discount. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Arkema here.
Solid track record with excellent balance sheet and pays a dividend
In the previous year, AKE has ramped up its bottom line by 39%, with its latest earnings level surpassing its average level over the last five years. Not only did AKE outperformed its past performance, its growth also exceeded the Chemicals industry expansion, which generated a 8.1% earnings growth. This is an optimistic signal for the future. AKE is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that AKE manages its cash and cost levels well, which is an important determinant of the company’s health. AKE’s has produced operating cash levels of 0.38x total debt over the past year, which implies that AKE’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
AKE’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if AKE’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the chemicals industry, AKE is also trading below its peers, relative to earnings generated. This further reaffirms that AKE is potentially undervalued.
For Arkema, I’ve put together three key aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for AKE’s future growth? Take a look at our free research report of analyst consensus for AKE’s outlook.
- Dividend Income vs Capital Gains: Does AKE 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 AKE as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AKE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.