Saracen Mineral Holdings Limited (ASX:SAR): Commentary On Fundamentals

Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on Saracen Mineral Holdings Limited (ASX:SAR) due to its excellent fundamentals in more than one area. SAR is a financially-healthy company with an impressive history and an optimistic future outlook. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my high-level commentary, take a look at the report on Saracen Mineral Holdings here.

Flawless balance sheet with solid track record

Over the past year, SAR has grown its earnings by 81.01%, with its most recent figure exceeding its annual average over the past five years. Not only did SAR outperformed its past performance, its growth also exceeded the Metals and Mining industry expansion, which generated a 18.18% earnings growth. This is an notable feat for the company.

ASX:SAR Future Profit Jun 15th 18

SAR is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. SAR’s has produced operating cash levels of 150.15x total debt over the past year, which implies that SAR’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

ASX:SAR Historical Debt Jun 15th 18

Next Steps:

For Saracen Mineral Holdings, I’ve put together three key factors you should further examine:

1. Valuation: What is SAR 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 SAR is currently mispriced by the market.

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

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