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A Holistic Look At Spirax-Sarco Engineering plc (LON:SPX)

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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Spirax-Sarco Engineering plc (LON:SPX) due to its excellent fundamentals in more than one area. SPX is a financially-sound , dividend-paying company with a an impressive track record of performance. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Spirax-Sarco Engineering here.

Solid track record with adequate balance sheet and pays a dividend

In the previous year, SPX has ramped up its bottom line by 42%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 29%, which is what investors like to see! SPX is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that SPX has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. SPX seems to have put its debt to good use, generating operating cash levels of 0.48x 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.

LSE:SPX Income Statement, May 31st 2019
LSE:SPX Income Statement, May 31st 2019

For those seeking income streams from their portfolio, SPX is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 1.2%.

LSE:SPX Historical Dividend Yield, May 31st 2019
LSE:SPX Historical Dividend Yield, May 31st 2019

Next Steps:

For Spirax-Sarco Engineering, there are three fundamental aspects you should look at:

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

  2. Valuation: What is SPX 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 SPX is currently mispriced by the market.

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