In This Article:
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 Praemium Limited (ASX:PPS), it is a financially-sound company with a strong history and an optimistic future outlook. 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 Praemium here.
Flawless balance sheet with high growth potential
Investors in search for stocks with room to flourish should look no further than PPS, with its expected earnings growth of 52% underlying the notable 33% return on equity over the next few years leading up to 2021. PPS 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. In addition to beating its historical values, PPS also outperformed its industry, which delivered a growth of 15%. This is an optimistic signal for the future.
PPS’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 a key determinant of the company’s health. PPS currently has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
Next Steps:
For Praemium, there are three relevant factors you should further research:
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Valuation: What is PPS 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 PPS is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does PPS 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 PPS as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of PPS? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.