Engro Corporation – What really matters in a Stock (Construction)

Investing its not for people with the mentality of wanting to get rich immediately

Comparison done with NSL Ltd (N02)

1)  IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.

  • Price to book ratio : 0.495 (50.5% Below fair value) N02 – 0.809
  • Price to earning ratio : 18.827 ( Below industry standard – 20.9)   N02 – 39.28

2)  LEARN ABOUT THEIR NUMBERS

  • Debt To Equity : 4.8% | 4.68%
  • Growth Performance : -15.54% (5 year growth)| -32.66% (5 year growth)
  • Dividend Yield : 0.58[ 5 years] | 3.89% [ 5 years]
  • Current Ratio : 4.435 (5 years record of High current ratio)| 5.537
  • Book Value per share : 1.85 | 1.80
  • Cash Flow per share : 0.0875 – 9.5% of its stock price
  • Below average management ability ( Poor dividend growth | Weak net income/gross profit margin growth | overall Positive cash flow – but considered poor)Screen Shot 2017-04-22 at 2.44.04 pmScreen Shot 2017-04-22 at 2.44.10 pm

3) TECHNICAL ANALYSIS

Screen Shot 2017-04-22 at 3.00.59 pm.jpg

Monthly Chart

Market is in an overall bearish trend, as market fails to broke off ’07 high and finds seller’s supply in 2015. Price action indicates that market might have a higher probability to trend lower if market fails to break $0.698. A market execution order as of now is not wise as it puts you into a 1:1.5 risk to reward ratio.

4) Would I be vested?

No. Why?

  • Poor dividend growth
  • Cashflow is considered low as compared to others
  • Technical analysis shows that its not wise

I’ll be trying to post 2 analysis a week!

“+1 Knowledge point”

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