In This Article:
Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on boohoo group plc (LON:BOO) due to its excellent fundamentals in more than one area. BOO is a financially-robust company with a great track record and an optimistic growth outlook. Below, I’ve touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, take a look at the report on boohoo group here.
Flawless balance sheet with high growth potential
Bullish market analysts are forecasting fast-growing BOO to deliver an exceptional sales growth rate of 71% over the next year. This underlies the notable 20% return on equity over the next few years leading up to 2021. BOO has a strong track record of performance. In the previous year, BOO delivered an impressive double-digit return of 8.5% Not surprisingly, BOO outperformed its industry which returned 7.5%, giving us more conviction of the company’s capacity to drive bottom-line growth going forward.
BOO’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. BOO’s has produced operating cash levels of 10.84x total debt over the past year, which implies that BOO’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
Next Steps:
For boohoo group, there are three key factors you should further examine:
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Valuation: What is BOO 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 BOO is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does BOO 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 BOO as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BOO? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.