” Mitigate your risk through understanding a company’s financial number is key to winning this game ” – anon
Comparison will be done with Auric Pacific Group (A23) – Currently has been offer $1.65 to go private / Owner of Sunshine/Foodjunction/Buttercup/SCS Dairy (famous butter)
1) IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.
- Price to book ratio : 3.037 (13.9% Below fair value) A23 – 1.236
- Price to earning ratio : 35.099 ( Below industry standard – 60.71) A23 – 28.751
2) LEARN ABOUT THEIR NUMBERS
- Debt To Equity : 119.82% | 1.57%
- Growth Performance : -2%| -Not given-
- Dividend Yield : 1.52%[ 5 years] | 6.22% [ 5 years]
- Current Ratio : 0.98 (5 years record of LOW current ratio)| 2.035
- Book Value per share : 0.4693 | 1.27
- Cash Flow per share : 0.248 – 17.9% of its stock price
- Average management ability ( Poor dividend growth | Weak net income/gross profit margin | overall Positive cash flow)
3) TECHNICAL ANALYSIS
Overall, market is in a bullish trend as you can see it failed to break 1st high and found strong demand further on. Market currently is at a price that is not advisable for entry as it puts you in a 1:3 Risk to Rewards Ratio. Additionally, market short-term trend doesn’t seems to be heading north (Doji candlestick formed) – Higher probability for a short-term bearish trend before heading back.
4) Would I be vested into it?
No would be my straight answer, it is not just cause of technical but its because of its poor financial numbers. With such poor current ratio for 5 years shows that the company ability to liquidate without a problem is a no-no for me, additionally with a high gearing track record ratio its a confirm no. You can definitely buy a better stock…