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Selena FM S.A. (WSE:SEL) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of SEL, it is a financially-robust company with a a great history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Selena FM here.
Flawless balance sheet and undervalued
Over the past few years, SEL has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did SEL outperformed its past performance, its growth also exceeded the Chemicals industry expansion, which generated a 2.0% earnings growth. This is an optimistic signal for the future. SEL 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 a crucial insight into the health of the company. SEL's has produced operating cash levels of 0.47x total debt over the past year, which implies that SEL's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
SEL'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, SEL's share price is trading below the group's average. This further reaffirms that SEL is potentially undervalued.
Next Steps:
For Selena FM, I've put together three important factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for SEL’s future growth? Take a look at our free research report of analyst consensus for SEL’s outlook.
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Dividend Income vs Capital Gains: Does SEL 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 SEL as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SEL? 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.