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Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on Guangshen Railway Company Limited (HKG:525) due to its excellent fundamentals in more than one area. 525 is a company with great financial health as well as a a great history of performance. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on Guangshen Railway here.
Flawless balance sheet with proven track record
In the previous year, 525 has ramped up its bottom line by 14%, with its latest earnings level surpassing its average level over the last five years. Not only did 525 outperformed its past performance, its growth also exceeded the Transportation industry expansion, which generated a -10% earnings growth. This is what investors like to see! 525’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that 525 manages its cash and cost levels well, which is an important determinant of the company’s health. Looking at 525’s capital structure, the company has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is rather impressive for a HK$27b market cap company. 525 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 Guangshen Railway, I’ve compiled three pertinent factors you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for 525’s future growth? Take a look at our free research report of analyst consensus for 525’s outlook.
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Valuation: What is 525 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 525 is currently mispriced by the market.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 525? 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.