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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on SG Fleet Group Limited (ASX:SGF) due to its excellent fundamentals in more than one area. SGF has a a strong track record of performance and a buoyant growth outlook not yet factored into the price. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on SG Fleet Group here.
Very undervalued with reasonable growth potential and pays a dividend
SGF’s outstanding revenue growth of 82% forecasted for the near future is certainly eye-catching for investors on the hunt for growth. This is expected to flow down into an impressive return on equity of 26% over the next couple of years. SGF has a strong track record of performance. In the previous year, SGF delivered an impressive double-digit return of 24% Unsurprisingly, SGF surpassed the Commercial Services industry return of 7.6%, which gives us more confidence of the company's capacity to drive earnings going forward.
SGF is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the commercial services industry, SGF is also trading below its peers, relative to earnings generated. This further reaffirms that SGF is potentially undervalued.
Next Steps:
For SG Fleet Group, I've put together three relevant aspects you should further examine:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Dividend Income vs Capital Gains: Does SGF 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 SGF as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SGF? 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.