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Netwealth Group Limited (ASX:NWL) 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 NWL, it is a financially-robust company with an impressive track record and an optimistic future outlook. Below, I've touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, take a look at the report on Netwealth Group here.
Exceptional growth potential with outstanding track record
NWL is an attractive stock for growth-seeking investors, with an expected earnings growth of 28% in the upcoming year which is expected to flow into an impressive return on equity of 58% over the next couple of years. In the past couple of years, NWL has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 52%, which is what investors like to see!
NWL's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that NWL has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. NWL currently has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is typically normal for a small-cap company. NWL has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
Next Steps:
For Netwealth Group, there are three essential factors you should further examine:
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Valuation: What is NWL 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 NWL is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does NWL 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 NWL as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of NWL? 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.