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Ester Industries Limited (NSE:ESTER) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of ESTER, it is a financially-sound company with a a strong track record of performance, trading at a great value. Below, I've touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, take a look at the report on Ester Industries here.
Solid track record and good value
In the past couple of years, ESTER has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. In addition to beating its historical values, ESTER also outperformed its industry, which delivered a growth of 14%. This is what investors like to see! ESTER'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 implies that ESTER manages its cash and cost levels well, which is a crucial insight into the health of the company. ESTER appears to have made good use of debt, producing operating cash levels of 0.22x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
ESTER's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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, ESTER's share price is trading below the group's average. This further reaffirms that ESTER is potentially undervalued.
Next Steps:
For Ester Industries, I've compiled three essential factors you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for ESTER’s future growth? Take a look at our free research report of analyst consensus for ESTER’s outlook.
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Dividend Income vs Capital Gains: Does ESTER 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 ESTER as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ESTER? 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.