Yirendai Ltd. (NYSE:YRD) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of YRD, it is a financially-sound company with a excellent future outlook, not yet factored into the price. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Yirendai here.
Flawless balance sheet and undervalued
YRD'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 YRD's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, YRD's share price is trading below the group's average. This bolsters the proposition that YRD's price is currently discounted.
YRD's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that YRD has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Investors should not worry about YRD’s debt levels because the company has none! This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. YRD has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
For Yirendai, I've compiled three important aspects you should look at:
- Historical Performance: What has YRD'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.
- Dividend Income vs Capital Gains: Does YRD 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 YRD as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of YRD? 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.