Yahoo Finance Why Fortescue Metals Group Limited (ASX:FMG) Is An Attractive Investment
Attractive stocks have exceptional fundamentals. In the case of Fortescue Metals Group Limited (ASX:FMG), there’s is a company that has been able to sustain great financial health, trading at an attractive share price. Below, I’ve touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Fortescue Metals Group here.
Good value with adequate balance sheet
FMG’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. FMG’s has produced operating cash levels of 0.4x total debt over the past year, which implies that FMG’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. FMG’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of FMG’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the metals and mining industry, FMG is also trading below its peers, relative to earnings generated. This further reaffirms that FMG is potentially undervalued.
Next Steps:
For Fortescue Metals Group, there are three important aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for FMG’s future growth? Take a look at our free research report of analyst consensus for FMG’s outlook.
Historical Performance: What has FMG’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.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FMG? 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.
