In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Build King Holdings Limited (HKG:240) due to its excellent fundamentals in more than one area. 240 is a financially-robust company with a an impressive track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Build King Holdings here.
Outstanding track record and good value
In the past couple of years, 240 has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 44% return to shareholders, which is an notable feat for the company. 240'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 an important determinant of the company’s health. 240's has produced operating cash levels of 1.61x total debt over the past year, which implies that 240's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
240's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of 240's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the construction industry, 240 is also trading below its peers, relative to earnings generated. This bolsters the proposition that 240's price is currently discounted.
Next Steps:
For Build King Holdings, there are three relevant aspects you should further research:
-
Future Outlook: What are well-informed industry analysts predicting for 240’s future growth? Take a look at our free research report of analyst consensus for 240’s outlook.
-
Dividend Income vs Capital Gains: Does 240 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 240 as an investment.
-
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 240? 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.