Yahoo Finance Why Fundamental Investors Might Love Augean plc (LON:AUG)
Augean plc (LON:AUG) 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 AUG, it is a financially-healthy company with an impressive history of performance, trading at a great value. 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 Augean here.
Flawless balance sheet and undervalued
In the previous year, AUG has ramped up its bottom line by 74%, with its latest earnings level surpassing its average level over the last five years. Not only did AUG outperformed its past performance, its growth also surpassed the Commercial Services industry expansion, which generated a 24% earnings growth. This paints a buoyant picture for the company. AUG's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. AUG's has produced operating cash levels of 8.47x total debt over the past year, which implies that AUG's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
AUG's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. 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, AUG's share price is trading below the group's average. This supports the theory that AUG is potentially underpriced.
Next Steps:
For Augean, I've put together three pertinent factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for AUG’s future growth? Take a look at our free research report of analyst consensus for AUG’s outlook.
Dividend Income vs Capital Gains: Does AUG 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 AUG as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AUG? 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.
