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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on China MeiDong Auto Holdings Limited (HKG:1268) due to its excellent fundamentals in more than one area. 1268 is a financially-healthy company with a great history and a buoyant growth outlook. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on China MeiDong Auto Holdings here.
Outstanding track record with high growth potential
One reason why investors are attracted to 1268 is its earnings growth potential in the near future of 21% underlying the notable 31% return on equity over the next few years leading up to 2022. In the previous year, 1268 has ramped up its bottom line by 32%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 26%, which is what investors like to see!
1268's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that 1268 manages its cash and cost levels well, which is a crucial insight into the health of the company. 1268's has produced operating cash levels of 0.24x total debt over the past year, which implies that 1268's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
For China MeiDong Auto Holdings, I've compiled three pertinent aspects you should further examine:
- Valuation: What is 1268 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 1268 is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does 1268 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 1268 as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1268? 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.