In This Article:
Attractive stocks have exceptional fundamentals. In the case of Deccan Cements Limited (NSE:DECCANCE), there's is a financially-sound company with a great history of performance, trading at a great value. 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 Deccan Cements here.
Flawless balance sheet and undervalued
DECCANCE delivered a bottom-line expansion of 51% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did DECCANCE outperformed its past performance, its growth also surpassed the Basic Materials industry expansion, which generated a 21% earnings growth. This paints a buoyant picture for the company. DECCANCE is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that DECCANCE has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. DECCANCE seems to have put its debt to good use, generating operating cash levels of 1.08x 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.
DECCANCE's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of DECCANCE's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, DECCANCE's share price is trading below the group's average. This bolsters the proposition that DECCANCE's price is currently discounted.
Next Steps:
For Deccan Cements, I've compiled three relevant aspects you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for DECCANCE’s future growth? Take a look at our free research report of analyst consensus for DECCANCE’s outlook.
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Dividend Income vs Capital Gains: Does DECCANCE 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 DECCANCE as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DECCANCE? 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.