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Autohome Inc. (NYSE:ATHM) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of ATHM, it is a financially-sound company with a strong history and a excellent future outlook. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Autohome here.
Flawless balance sheet with solid track record
ATHM’s cash-generating ability is outstanding, with analysts expecting its operating cash flows to flourish by 55% in the upcoming year. This is expected to flow down into an impressive return on equity of 24% over the next couple of years. Over the past year, ATHM has grown its earnings by 41%, with its most recent figure exceeding its annual average over the past five years. This illustrates a strong track record, leading to a satisfying return on equity of 26%. which is what investors like to see!
ATHM's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that ATHM has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. ATHM currently has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is rather impressive for a US$10b market cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.
For Autohome, I've put together three key factors you should look at:
- Valuation: What is ATHM 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 ATHM is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does ATHM 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 ATHM as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ATHM? 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 firstname.lastname@example.org. 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.