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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Eland Oil & Gas PLC (LON:ELA) due to its excellent fundamentals in more than one area. ELA is a financially-healthy company with a strong track record and a buoyant growth outlook. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on Eland Oil & Gas here.
Outstanding track record with excellent balance sheet
Investors in search of impressive top-line expansion should look no further than ELA, with its expected revenue growth to more than double in the upcoming year. This is expected to flow down into an impressive return on equity of 31% over the next couple of years. ELA delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. This illustrates a strong track record, leading to a satisfying return on equity of 47%, which is an optimistic signal for the future.
ELA's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that ELA has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. ELA seems to have put its debt to good use, generating operating cash levels of 0.95x 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.
For Eland Oil & Gas, there are three pertinent factors you should further research:
- Valuation: What is ELA 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 ELA is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does ELA 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 ELA as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ELA? 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 email@example.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.