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Should You Be Holding Peugeot S.A. (EPA:UG)?

Simply Wall St

Peugeot S.A. (EPA:UG) 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 UG, it is a financially-sound company with an impressive track record of performance, trading at a discount. 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, read the full report on Peugeot here.

Undervalued with proven track record

Over the past few years, UG has demonstrated a proven ability to generate robust returns of 4.9% Not surprisingly, UG outperformed its industry which returned 3.9%, giving us more conviction of the company's capacity to drive bottom-line growth going forward. UG seems to have put its debt to good use, generating operating cash levels of 0.96x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. Also, UG’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps UG expand.

ENXTPA:UG Income Statement, October 10th 2019

UG's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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, UG's share price is trading below the group's average. This further reaffirms that UG is potentially undervalued.

ENXTPA:UG Price Estimation Relative to Market, October 10th 2019

Next Steps:

For Peugeot, I've put together three essential factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for UG’s future growth? Take a look at our free research report of analyst consensus for UG’s outlook.
  2. Dividend Income vs Capital Gains: Does UG 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 UG as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of UG? 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.