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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Master Pharm SA (WSE:MPH), it is a financially-robust company with a a strong history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Master Pharm here.

Excellent balance sheet and good value

MPH delivered a bottom-line expansion of 34% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did MPH outperformed its past performance, its growth also exceeded the Personal Products industry expansion, which generated a 18% earnings growth. This is what investors like to see! MPH'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 suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. MPH's has produced operating cash levels of 9.9x total debt over the past year, which implies that MPH's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

MPH 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 MPH'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, MPH's share price is trading below the group's average. This supports the theory that MPH is potentially underpriced.

Next Steps:

For Master Pharm, there are three key aspects you should look at:

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

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

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