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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 Yancoal Australia Ltd (ASX:YAL), it is a financially-robust company with a a great 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, take a look at the report on Yancoal Australia here.
Undervalued with proven track record and pays a dividend
YAL delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. In addition to beating its historical values, YAL also outperformed its industry, which delivered a growth of 13%. This paints a buoyant picture for the company. YAL's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that YAL has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. YAL's has produced operating cash levels of 0.42x total debt over the past year, which implies that YAL's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
YAL'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 YAL's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the oil and gas industry, YAL is also trading below its peers, relative to earnings generated. This further reaffirms that YAL is potentially undervalued.
For Yancoal Australia, I've put together three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for YAL’s future growth? Take a look at our free research report of analyst consensus for YAL’s outlook.
- Dividend Income vs Capital Gains: Does YAL 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 YAL as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of YAL? 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 email@example.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.