Flight Centre Travel Group and 2 other ASX shares valued below their intrinsic value

The Australian share market has seen a slight decline of 1.4% over the past week, but is up 6.5% over the past year and earnings are expected to grow 13% annually. In such a volatile environment, identifying potentially undervalued stocks can present opportunities for investors looking for value in a growing market.

The 10 most undervalued stocks in Australia based on cash flows

Click here to see the full list of 49 stocks from our Undervalued ASX Stocks Based on Cash Flows screener.

Let’s review some notable picks from our reviewed stocks

Overview: Flight Centre Travel Group Limited is a travel retailer serving both the leisure and corporate sectors in regions including Australia, New Zealand, the Americas, Europe, the Middle East, Africa and Asia and has a market capitalisation of approximately A$4.54 billion.

Operations: The company’s revenue comes primarily from its leisure and business travel businesses, generating A$1.28 billion and A$1.06 billion respectively.

Estimated discount to fair value: 19.7%

Flight Centre Travel Group (FLT) is trading at A$20.63, below our estimated fair value of A$25.62, suggesting potential undervaluation. FLT has recently posted earnings and is expected to grow 18.8% annually, beating the Australian market forecast of 13%. Despite this growth, revenue growth of 9.7% annually exceeds the market’s 5.2% but does not reach high growth thresholds. With a forecast high return on equity of 21.8% over three years, FLT combines solid profitability prospects with moderate undervaluation based on cash flows.

Overview: HMC Capital Limited operates in Australia and manages real estate funds with a market capitalization of approximately A$2.63 billion.

Operations: The company manages real estate-focused funds and has revenues of approximately A$80.29 million.

The story goes on

Estimated discount to fair value: 43.1%

HMC Capital appears to be undervalued at a current price of A$7.14 against an estimated fair value of A$12.55, which represents a significant discount. The company’s revenue growth is robust at 20.1% annually, outperforming the Australian market at 5.2%. Despite recent shareholder dilution through several share offerings totaling A$188.30 million, HMC’s earnings are expected to grow at 16.9% annually, outperforming the market average of 13%. However, the forecast return on equity in three years is relatively low at 10.5%.

Overview: Judo Capital Holdings Limited operates in Australia and offers a range of banking products and services tailored to small and medium-sized businesses. The company has a market capitalization of approximately A$1.38 billion.

Operations: The company generates its revenue primarily from its banking business and totals AUD 328.70 million.

Estimated discount to fair value: 10.3%

Judo Capital Holdings is trading at A$1.24, below its calculated fair value of A$1.38. While revenue growth is estimated at 16.6% annually, outperforming the Australian market average of 5.2%, earnings are expected to grow at 26.32% annually, also above the national trend of 13%. Judo was recently added to the S&P/ASX 200 Index and shows potential despite a modest forecast return on equity of 10.1% over three years and a valuation that is not significantly undervalued on a discounted cash flow basis.

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This Simply Wall St article is of a general nature. We comment based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They do not constitute a recommendation to buy or sell stocks and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

Companies discussed in this article include ASX:FLT, ASX:HMC and ASX:JDO.

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