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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Water Oasis Group Limited (HKG:1161) due to its excellent fundamentals in more than one area. 1161 is a financially-healthy company with a a strong history of performance, trading at a great value. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Water Oasis Group here.

Outstanding track record with excellent balance sheet

1161 delivered a bottom-line expansion of 37% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 33% return to shareholders, which paints a buoyant picture for the company. With a debt-to-equity ratio of 5.8%, 1161’s debt level is acceptable. This implies that 1161 has a healthy balance between taking advantage of low cost debt funding as well as sufficient financial flexibility without succumbing to the strict terms of debt. 1161 seems to have put its debt to good use, generating operating cash levels of 9.36x 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.

1161 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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. Compared to the rest of the consumer services industry, 1161 is also trading below its peers, relative to earnings generated. This bolsters the proposition that 1161's price is currently discounted.

Next Steps:

For Water Oasis Group, I've compiled three important aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for 1161’s future growth? Take a look at our free research report of analyst consensus for 1161’s outlook.

2. Dividend Income vs Capital Gains: Does 1161 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 1161 as an investment.

3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1161? 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.