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Why I Like Weichai Power Co., Ltd. (HKG:2338)

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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 Weichai Power Co., Ltd. (HKG:2338) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe 2338 has a lot to offer. Basically, it is a financially-healthy , dividend-paying company with a a great track record of performance. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Weichai Power here.

Proven track record with adequate balance sheet and pays a dividend

In the previous year, 2338 has ramped up its bottom line by 24%, with its latest earnings level surpassing its average level over the last five years. In addition to beating its historical values, 2338 also outperformed its industry, which delivered a growth of 19%. This is what investors like to see! 2338's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. 2338's has produced operating cash levels of 0.79x total debt over the past year, which implies that 2338's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

SEHK:2338 Income Statement, June 29th 2019
SEHK:2338 Income Statement, June 29th 2019

For those seeking income streams from their portfolio, 2338 is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 4.0%.

SEHK:2338 Historical Dividend Yield, June 29th 2019
SEHK:2338 Historical Dividend Yield, June 29th 2019

Next Steps:

For Weichai Power, I've put together three important aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 2338’s future growth? Take a look at our free research report of analyst consensus for 2338’s outlook.

  2. Valuation: What is 2338 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 2338 is currently mispriced by the market.

  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 2338? 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.