In This Article:
Attractive stocks have exceptional fundamentals. In the case of Orbital Corporation Limited (ASX:OEC), there’s is a financially-sound company with a a excellent future outlook, not yet factored into the price. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Orbital here.
Exceptional growth potential and undervalued
Bullish market analysts are forecasting fast-growing OEC to deliver an exceptional triple-digit sales growth rate over the next year. This is expected to flow down into an impressive return on equity of 20.9% over the next couple of years. OEC’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if OEC’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the aerospace & defense industry, OEC is also trading below its peers, relative to earnings generated. This further reaffirms that OEC is potentially undervalued.
OEC is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that OEC manages its cash and cost levels well, which is a crucial insight into the health of the company. With a debt-to-equity ratio of 37.0%, OEC’s debt level is reasonable. This means that OEC’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt.
Next Steps:
For Orbital, there are three fundamental aspects you should further research:
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Historical Performance: What has OEC’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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Dividend Income vs Capital Gains: Does OEC 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 OEC as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of OEC? 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.