Over the last 7 days, the Australian market has experienced a 1.5% drop, though it remains up by 19% over the past year with earnings forecasted to grow by 12% annually. In this context, identifying stocks that may be trading at a discount can offer potential opportunities for investors looking to capitalize on undervalued assets in a growing market.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Click here to see the full list of 46 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Here's a peek at a few of the choices from the screener.

Ansell

Overview: Ansell Limited is a global company that designs, sources, develops, manufactures, distributes, and sells hand and body protection solutions across various regions including the Asia Pacific, Europe, the Middle East, Africa, Latin America, the Caribbean, and North America with a market cap of A$4.55 billion.

Operations: The company's revenue is derived from two main segments: Healthcare, contributing $834.20 million, and Industrial (Including Specialty Markets), accounting for $785.10 million.

Estimated Discount To Fair Value: 45.8%

Ansell is trading at A$31.43, significantly below its estimated fair value of A$57.95, indicating potential undervaluation based on cash flows. Despite a forecasted revenue growth of 6.7% per year and earnings expected to rise by 22.5% annually, recent financial results show a decline in profit margins and net income due to large one-off items. The CFO's upcoming resignation adds uncertainty, while shareholder dilution has occurred over the past year.

• Our comprehensive growth report raises the possibility that Ansell is poised for substantial financial growth.
• Dive into the specifics of Ansell here with our thorough financial health report.

Judo Capital Holdings

Overview: Judo Capital Holdings Limited, through its subsidiaries, provides a range of banking products and services tailored for small and medium businesses in Australia, with a market capitalization of A$2.09 billion.

Operations: Judo Capital Holdings Limited generates revenue of A$326.60 million from its banking segment, focusing on services for small and medium businesses in Australia.

Estimated Discount To Fair Value: 18%

Judo Capital Holdings, trading at A$1.87, is undervalued relative to its fair value estimate of A$2.28. Despite a modest 18% discount to fair value and projected earnings growth of 25.9% annually over the next three years, concerns arise from a high bad loans ratio of 2.8%. Recent financials show stable net interest income but a slight decline in net income year-over-year, while board changes introduce potential strategic shifts.

• Our expertly prepared growth report on Judo Capital Holdings implies its future financial outlook may be stronger than recent results.
• Click to explore a detailed breakdown of our findings in Judo Capital Holdings' balance sheet health report.

PWR Holdings

Overview: PWR Holdings Limited specializes in the design, production, and sale of cooling products and solutions across various international markets, with a market cap of A$880.94 million.

Operations: The company's revenue segments include A$41.98 million from PWR C&R and A$111.26 million from PWR Performance Products.

Estimated Discount To Fair Value: 19.6%

PWR Holdings, trading at A$8.76, is slightly undervalued against its fair value estimate of A$10.9, with earnings projected to grow 14.99% annually, outpacing the Australian market's 12.3%. Recent financials show strong performance with sales increasing to A$97.53 million and net income rising to A$20.99 million for the year ending June 2024. Leadership changes include appointing Sharyn Williams as CFO in early 2025, which may influence strategic direction positively.

• Upon reviewing our latest growth report, PWR Holdings' projected financial performance appears quite optimistic.
• Navigate through the intricacies of PWR Holdings with our comprehensive financial health report here.

Next Steps

• Dive into all 46 of the Undervalued ASX Stocks Based On Cash Flows we have identified here.
• Already own these companies? Link your portfolio to Simply Wall St and get alerts on any new warning signs to your stocks.
• Invest smarter with the free Simply Wall St app providing detailed insights into every stock market around the globe.

Ready For A Different Approach?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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:ANN ASX:JDO and ASX:PWH.

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