Domtar Corporation (NYSE:UFS) 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 UFS, it is a financially-robust company with an impressive history superior dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in digging a bit deeper into my commentary, read the full report on Domtar here.
Excellent balance sheet, good value and pays a dividend
UFS'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 UFS manages its cash and cost levels well, which is a key determinant of the company’s health. UFS seems to have put its debt to good use, generating operating cash levels of 0.56x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. UFS is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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, UFS's share price is trading below the group's average. This bolsters the proposition that UFS's price is currently discounted.
UFS is considered one of the top dividend payers in the market, and its profitability ensures that dividends are well-covered by its net income.
Next Steps:
For Domtar, I've compiled three fundamental factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for UFS’s future growth? Take a look at our free research report of analyst consensus for UFS’s outlook.
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Historical Performance: What has UFS's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of UFS? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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