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An Examination Of Lancashire Holdings Limited (LON:LRE)

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Lancashire Holdings Limited (LON:LRE) 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 LRE, it is a company with impressive financial health as well as an optimistic future outlook. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Lancashire Holdings here.

Reasonable growth potential with adequate balance sheet

LRE is an attractive stock for growth-seeking investors, with an expected earnings growth of 29% in the upcoming year. This growth in the bottom-line is bolstered by an impressive top-line expansion of 57% over the same period, which is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. LRE is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that LRE has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. LRE’s debt-to-equity ratio stands at 30%, which means its debt level is reasonable. This indicates a good balance between taking advantage of low cost funding through debt financing, but having enough financial flexibility and headroom to grow debt in the future.

LSE:LRE Past and Future Earnings, May 14th 2019
LSE:LRE Past and Future Earnings, May 14th 2019

Next Steps:

For Lancashire Holdings, there are three essential factors you should further research:

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  1. Historical Performance: What has LRE'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.

  2. Valuation: What is LRE 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 LRE is currently mispriced by the market.

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