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!
I've been keeping an eye on Varroc Engineering Limited (NSE:VARROC) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe VARROC has a lot to offer. Basically, it is a company that has been able to sustain great financial health, trading at an attractive share price. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Varroc Engineering here.
Undervalued with adequate balance sheet
VARROC appears to have made good use of debt, producing operating cash levels of 0.65x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. Debt funding requires timely payments on interest to lenders. VARROC’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses. VARROC's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if VARROC's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the auto components industry, VARROC is also trading below its peers, relative to earnings generated. This supports the theory that VARROC is potentially underpriced.
Next Steps:
For Varroc Engineering, there are three relevant aspects you should look at:
-
Future Outlook: What are well-informed industry analysts predicting for VARROC’s future growth? Take a look at our free research report of analyst consensus for VARROC’s outlook.
-
Historical Performance: What has VARROC'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.
-
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of VARROC? 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.