In This Article:
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 Oriental Watch Holdings Limited (HKG:398), it is a financially-healthy company with a a strong track record of performance, trading at a discount. 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, take a look at the report on Oriental Watch Holdings here.
Flawless balance sheet, undervalued and pays a dividend
Over the past few years, 398 has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did 398 outperformed its past performance, its growth also surpassed the Specialty Retail industry expansion, which generated a 23% earnings growth. This is an optimistic signal for the future. 398 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. 398 seems to have put its debt to good use, generating operating cash levels of 5.71x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
398 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 398's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, 398's share price is trading below the group's average. This bolsters the proposition that 398's price is currently discounted.
Next Steps:
For Oriental Watch Holdings, I've compiled three pertinent aspects you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for 398’s future growth? Take a look at our free research report of analyst consensus for 398’s outlook.
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Dividend Income vs Capital Gains: Does 398 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 398 as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 398? 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.