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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of LEWAG Holding Aktiengesellschaft (FRA:KGR), it is a financially-sound company with a a strong track record of performance, trading at a discount. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, read the full report on LEWAG Holding here.
Flawless balance sheet and good value
Over the past few years, KGR has demonstrated a proven ability to generate robust returns of 6.0% Unsurprisingly, KGR surpassed the industry return of 5.5%, which gives us more confidence of the company's capacity to drive earnings going forward. KGR'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 implies that KGR manages its cash and cost levels well, which is a crucial insight into the health of the company. KGR's has produced operating cash levels of 1.18x total debt over the past year, which implies that KGR's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
KGR's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if KGR's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the machinery industry, KGR is also trading below its peers, relative to earnings generated. This supports the theory that KGR is potentially underpriced.
For LEWAG Holding, there are three fundamental factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for KGR’s future growth? Take a look at our free research report of analyst consensus for KGR’s outlook.
- Dividend Income vs Capital Gains: Does KGR 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 KGR as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of KGR? 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.