Why SRG Global Limited (ASX:SRG) Is An Attractive Investment To Consider

SRG Global Limited (ASX:SRG) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of SRG, it is a financially-sound company with a a buoyant future outlook, not yet priced into the stock. 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 SRG Global here.

Very undervalued with flawless balance sheet and pays a dividend

One reason why investors are attracted to SRG is its notable earnings growth potential in the near future of 30%. The optimistic bottom-line growth is supported by a similarly outstanding revenue growth over the same time period, which indicates that earnings is driven by top-line activity rather than purely unsustainable cost-reduction initiatives. SRG 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 SRG’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, SRG’s share price is trading below the group’s average. This further reaffirms that SRG is potentially undervalued.

ASX:SRG Future Profit January 14th 19

SRG’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. SRG appears to have made good use of debt, producing operating cash levels of 3.23x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

ASX:SRG Historical Debt January 14th 19

Next Steps:

For SRG Global, I’ve put together three important factors you should further examine:

1. Historical Performance: What has SRG’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.

2. Dividend Income vs Capital Gains: Does SRG 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 SRG as an investment.

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