In This Article:
Adairs Limited (ASX:ADH) 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 ADH, it is a financially-sound company with an impressive history and an optimistic growth outlook. Below, I’ve touched on some key aspects you should know on a high level. If you’re interested in understanding beyond my high-level commentary, read the full report on Adairs here.
Outstanding track record with flawless balance sheet and pays a dividend
Over the past year, ADH has grown its earnings by 45%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 26% return to shareholders, which is an notable feat for the company.
ADH’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that ADH has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. ADH seems to have put its debt to good use, generating operating cash levels of 1.57x 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.
Next Steps:
For Adairs, I’ve put together three essential aspects you should further examine:
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Valuation: What is ADH 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 ADH is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does ADH 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 ADH as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ADH? 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.