Why We Think Perfect Shape Medical Limited (HKG:1830) Could Be Worth Looking At
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Perfect Shape Medical Limited (HKG:1830) 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 1830, it is a financially-sound company with a a great track record of performance, trading at a great value. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Perfect Shape Medical here.
Flawless balance sheet with outstanding track record
In the past couple of years, 1830 has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 49% return to shareholders, which paints a buoyant picture for the company. 1830'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 indicates that 1830 has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. Looking at 1830's capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
1830 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if 1830's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, 1830's share price is trading below the group's average. This further reaffirms that 1830 is potentially undervalued.
Next Steps:
For Perfect Shape Medical, I've put together three fundamental factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for 1830’s future growth? Take a look at our free research report of analyst consensus for 1830’s outlook.
Dividend Income vs Capital Gains: Does 1830 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 1830 as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1830? 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.
