National Tyre & Wheel Limited (ASX:NTD) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of NTD, it is a financially-robust company with a great history high-grade dividend payments, trading at a great value. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on National Tyre & Wheel here.
Undervalued with excellent balance sheet and pays a dividend
NTD'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 NTD manages its cash and cost levels well, which is a key determinant of the company’s health. NTD's has produced operating cash levels of 0.32x total debt over the past year, which implies that NTD's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. NTD 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. Also, relative to the rest of its peers with similar levels of earnings, NTD's share price is trading below the group's average. This further reaffirms that NTD is potentially undervalued.
NTD's high dividend payments make it one of the best dividend stocks on the market, and its profitability ensures that dividends are well-covered by its net income.
For National Tyre & Wheel, I've put together three essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for NTD’s future growth? Take a look at our free research report of analyst consensus for NTD’s outlook.
- Historical Performance: What has NTD'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 NTD? 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.