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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Harvey Norman Holdings Limited (ASX:HVN), it is a financially-sound company with a a great track record high-quality dividend payments, trading at a great value. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my broad commentary, read the full report on Harvey Norman Holdings here.
Flawless balance sheet established dividend payer
HVN’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 HVN manages its cash and cost levels well, which is an important determinant of the company’s health. HVN’s has produced operating cash levels of 0.49x total debt over the past year, which implies that HVN’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. HVN is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of HVN’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the multiline retail industry, HVN is also trading below its peers, relative to earnings generated. This further reaffirms that HVN is potentially undervalued.
For those seeking income streams from their portfolio, HVN is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 9.0%, making it one of the best dividend companies in the market.
Next Steps:
For Harvey Norman Holdings, I’ve put together three important factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for HVN’s future growth? Take a look at our free research report of analyst consensus for HVN’s outlook.
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Historical Performance: What has HVN’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 HVN? 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.