The Australian market has shown resilience, closing 34 points higher at 8,189 despite initial predictions of a downturn, with sectors like Energy and Real Estate leading the charge. This positive sentiment across most sectors highlights the potential for small-cap stocks to emerge as strong performers in such a dynamic environment. Identifying stocks with solid foundations and growth potential is crucial in navigating this landscape, making EQT Holdings and two other emerging small caps worthy of attention.
Top 10 Undiscovered Gems With Strong Fundamentals In Australia
Overview: EQT Holdings Limited, along with its subsidiaries, offers philanthropic, trustee executor, and investment services in Australia and has a market capitalization of A$856.29 million.
Operations: EQT Holdings generates revenue primarily from its Corporate & Superannuation Trustee Services, contributing A$71.51 million, and Trustee & Wealth Services (excluding Superannuation Trustee Services), which adds A$99.08 million. The company also earns a smaller portion of revenue from its Corporate Trustee Services in the United Kingdom/Ireland at A$3.52 million.
EQT Holdings, a financial entity in Australia, has shown notable resilience with more cash than its total debt. Over the past five years, its debt to equity ratio rose from 4.6% to 18.3%, indicating increased leverage but not necessarily a red flag given its strong cash position. Earnings have grown modestly at 1.2% annually over five years and are forecasted to grow by 22.7% per year, suggesting potential upside in profitability. The company's interest payments are well-covered by EBIT at a ratio of 9.6 times, reflecting robust financial health despite industry challenges and recent executive changes within their compliance committee structure.
Overview: Mader Group Limited is a contracting company that offers specialist technical services in the mining, energy, and industrial sectors both in Australia and internationally, with a market cap of A$1.22 billion.
Operations: Mader Group generates revenue primarily from its Staffing & Outsourcing Services segment, which accounts for A$774.47 million. The company's market capitalization stands at approximately A$1.22 billion.
Mader Group, an intriguing player in the Australian market, has demonstrated robust earnings growth of 30.9% over the past year, outpacing the industry average of 9.1%. Trading at a significant discount of 53.9% below its estimated fair value, it presents an interesting valuation case. The company's financial health appears solid with a reduced debt to equity ratio from 70.9% to 38.2% over five years and a satisfactory net debt to equity ratio of 19.4%. Despite recent insider selling activity, Mader's interest payments are well covered by EBIT at a multiple of 19.8 times, suggesting strong operational efficiency and potential for continued profitability growth forecasted at 15.51% annually.
Overview: Steamships Trading Company Limited operates in shipping, transport, property, and hospitality sectors in Papua New Guinea with a market capitalization of A$427.91 million.
Operations: Steamships Trading generates revenue primarily from its logistics segment, which accounts for PGK 404.68 million, followed by property and hospitality at PGK 313.16 million. The finance, investment, and eliminations segment shows a negative contribution of PGK -7.20 million.
Steamships Trading, a smaller player in the Industrials sector, is showing promising signs with earnings growth of 38.2% over the past year, outpacing the industry average of 8.5%. The company’s debt picture has improved, as its debt to equity ratio decreased from 39.8% to 33.6% over five years, while maintaining a satisfactory net debt to equity ratio of 30.7%. Despite these positives, its free cash flow remains negative and recent financials were impacted by a one-off gain of PGK17.7M. With an EBIT covering interest payments by 19.5 times, Steamships seems financially robust for future endeavors.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ASX:EQT ASX:MAD and ASX:SST.
