In This Article:
Riverstone Holdings Limited (SGX:AP4) 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 AP4, it is a financially-robust company with a strong track record and an optimistic future outlook. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Riverstone Holdings here.
Excellent balance sheet with reasonable growth potential
AP4 is expected to churn out cash in the short term, with its operating cash flow predicted to expand by 55%. This underlies the notable 21% return on equity over the next few years leading up to 2021. Over the past few years, AP4 has demonstrated a proven ability to generate robust returns of 20% Unsurprisingly, AP4 surpassed the Commercial Services industry return of 6.6%, which gives us more confidence of the company’s capacity to drive earnings going forward.
AP4’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 AP4 manages its cash and cost levels well, which is a key determinant of the company’s health. AP4 appears to have made good use of debt, producing operating cash levels of 6.25x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
Next Steps:
For Riverstone Holdings, I’ve put together three pertinent factors you should further research:
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Valuation: What is AP4 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 AP4 is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does AP4 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 AP4 as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AP4? 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.