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Gale Pacific Limited (ASX:GAP): A Fundamentally Attractive Investment

Attractive stocks have exceptional fundamentals. In the case of Gale Pacific Limited (ASX:GAP), there’s is a financially-sound company with a a strong track record high-grade dividend payments, trading at a discount. 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, read the full report on Gale Pacific here.

Undervalued with excellent balance sheet and pays a dividend

GAP is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that GAP has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. GAP’s has produced operating cash levels of 0.3x total debt over the past year, which implies that GAP’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. GAP’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if GAP’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the consumer durables industry, GAP is also trading below its peers, relative to earnings generated. This further reaffirms that GAP is potentially undervalued.

ASX:GAP Intrinsic Value Export October 31st 18
ASX:GAP Intrinsic Value Export October 31st 18

GAP is also a dividend company, with ample net income to cover its dividend payout, which has been consistently growing over the past decade, keeping income investors happy.

ASX:GAP Historical Dividend Yield October 31st 18
ASX:GAP Historical Dividend Yield October 31st 18

Next Steps:

For Gale Pacific, I’ve compiled three pertinent factors you should look at:

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  1. Future Outlook: What are well-informed industry analysts predicting for GAP’s future growth? Take a look at our free research report of analyst consensus for GAP’s outlook.

  2. Historical Performance: What has GAP’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.

  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of GAP? 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.