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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 Soitec S.A. (EPA:SOI), it is a financially-robust company with a great track record and a excellent future outlook. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Soitec here.
Outstanding track record with exceptional growth potential
SOI is an attractive stock for growth-seeking investors, with an expected earnings growth of 21% in the upcoming year. Earnings growth is paired with an eye-catching top-line trajectory of 78%, which indicates a high-quality bottom-line expansion, as opposed to those driven simple by unsustainable cost-cutting activities. SOI delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 32%, which is what investors like to see!
SOI is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. SOI appears to have made good use of debt, producing operating cash levels of 0.21x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
Next Steps:
For Soitec, I've compiled three pertinent aspects you should further examine:
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Valuation: What is SOI 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 SOI is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does SOI 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 SOI as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SOI? 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.