Yahoo Finance Exploring ASX Stocks Estimated To Be Up To 43.1% Below Intrinsic Value
Over the past year, the Australian stock market has shown a robust increase of 11%, despite remaining flat in the last seven days. Given this steady growth and projections for earnings to rise by 13% annually, investors might find potential in stocks that are currently trading below their intrinsic value.
Top 10 Undervalued Stocks Based On Cash Flows In Australia
Name | Current Price | Fair Value (Est) | Discount (Est) |
MaxiPARTS (ASX:MXI) | A$2.04 | A$3.98 | 48.8% |
Ansell (ASX:ANN) | A$25.71 | A$49.33 | 47.9% |
Strike Energy (ASX:STX) | A$0.225 | A$0.45 | 49.8% |
Australian Clinical Labs (ASX:ACL) | A$2.40 | A$4.73 | 49.2% |
IPH (ASX:IPH) | A$6.15 | A$11.93 | 48.5% |
hipages Group Holdings (ASX:HPG) | A$1.06 | A$2.05 | 48.4% |
ReadyTech Holdings (ASX:RDY) | A$3.27 | A$6.22 | 47.5% |
Millennium Services Group (ASX:MIL) | A$1.145 | A$2.24 | 48.9% |
Airtasker (ASX:ART) | A$0.295 | A$0.57 | 48.3% |
SiteMinder (ASX:SDR) | A$5.16 | A$9.96 | 48.2% |
Let's explore several standout options from the results in the screener
Domino's Pizza Enterprises
Overview: Domino's Pizza Enterprises Limited is a company that operates retail food outlets, with a market capitalization of approximately A$3.17 billion.
Operations: The company generates its revenue primarily from restaurant operations, amounting to A$2.48 billion.
Estimated Discount To Fair Value: 37.3%
Domino's Pizza Enterprises, priced at A$36.38, is considered undervalued against a fair value estimate of A$58.03, reflecting its potential despite some financial hiccups. Although its profit margins have decreased from 6.7% to 2.2%, the company's earnings are expected to grow by 24.37% annually over the next three years, outpacing the Australian market forecast of 13%. Additionally, while DMP carries a high level of debt and has experienced shareholder dilution, it still trades at a significant discount based on discounted cash flow analysis and is projected to achieve a robust return on equity of 29.9% in three years.
Infomedia
Overview: Infomedia Ltd is a technology company that provides electronic parts catalogues, service quoting software, and e-commerce solutions to the automotive industry globally, with a market capitalization of A$573.97 million.
Operations: The company generates A$136.58 million from its publishing and periodicals segment.
Estimated Discount To Fair Value: 43.1%
Infomedia Ltd, currently priced at A$1.57, is trading below its calculated fair value of A$2.75, indicating a significant undervaluation based on discounted cash flow analysis. This pricing suggests a potential upside as analysts forecast the stock to increase by 24.9%. Expected to outperform with an annual earnings growth of 27.83%, Infomedia's projected revenue growth at 7.9% annually also surpasses the Australian market average (5.3%). Additionally, a robust future return on equity of 21.3% further underscores its financial health and growth prospects.
Red 5
Overview: Red 5 Limited is a company focused on the exploration, production, and mining of gold deposits and mineral properties in the Philippines and Australia, with a market capitalization of approximately A$2.69 billion.
Operations: The company generates revenue primarily from production, development, and exploration assets totaling A$546.40 million.
Estimated Discount To Fair Value: 36%
Red 5 Limited, with a current price of A$0.4, is significantly undervalued based on a discounted cash flow valuation of A$0.63, reflecting a 36% discount to its fair value. The company's earnings are expected to grow by 47.2% annually over the next three years, outpacing the Australian market forecast of 13%. Revenue growth is also projected to exceed market averages significantly at 34.6% annually compared to the market's 5.3%. However, Red has experienced substantial shareholder dilution in the past year and its Return on Equity is predicted to be low at 17.6%. Recent management changes following a merger with Silver Lake Resources could impact future performance and governance stability.
According our earnings growth report, there's an indication that Red 5 might be ready to expand.
Click here and access our complete balance sheet health report to understand the dynamics of Red 5.
Turning Ideas Into Actions
Get an in-depth perspective on all 52 Undervalued ASX Stocks Based On Cash Flows by using our screener here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ASX:DMPASX:IFM and ASX:RED.
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