I've been keeping an eye on Allied Farmers Limited (NZSE:ALF) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe ALF has a lot to offer. Basically, it is a financially-robust company with a an impressive track record of performance, trading at a discount. 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 Allied Farmers here.

Excellent balance sheet with solid track record

In the previous year, ALF has ramped up its bottom line by 67%, with its latest earnings level surpassing its average level over the last five years. In addition to beating its historical values, ALF also outperformed its industry, which delivered a growth of 16%. This is an notable feat for the company. ALF's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that ALF manages its cash and cost levels well, which is a crucial insight into the health of the company. ALF's has produced operating cash levels of 0.39x total debt over the past year, which implies that ALF's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

ALF's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. 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. Also, relative to the rest of its peers with similar levels of earnings, ALF's share price is trading below the group's average. This supports the theory that ALF is potentially underpriced.

Next Steps:

For Allied Farmers, I've put together three key aspects you should look at:

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

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

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