Ceconomy AG (ETR:CEC) 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 CEC, it is a financially-healthy company with a strong history and an optimistic future outlook. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Ceconomy here.

Solid track record and good value

One reason why investors are attracted to CEC is its earnings growth potential in the near future of 30% underlying the notable 23% return on equity over the next few years leading up to 2022. Over the past few years, CEC has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 25% return to shareholders, which is an notable feat for the company.

CEC seems to have put its debt to good use, generating operating cash levels of 0.24x 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. Debt funding requires timely payments on interest to lenders. CEC’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses.

Next Steps:

For Ceconomy, I've compiled three fundamental aspects you should further research:

1. Valuation: What is CEC 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 CEC is currently mispriced by the market.

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

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