The 3 ASX shares are estimated to trade up to 49.7% below intrinsic value

The Australian market is up 1.7% in the last 7 days and 17% in the last year, with earnings expected to grow at 12% annually. In this promising environment, identifying stocks of companies trading below their intrinsic value can offer significant opportunities for investors looking to capitalize on potential growth.

Top 10 Undervalued Shares by Cash Flow in Australia

Click here to see the full list of the 48 stocks in our ASX Undervalued Shares by Cash Flow screener.

Below is a selection of stocks filtered on our screen.

Review: Codan Limited (ASX:CDA) develops technology solutions for the United Nations, security and military groups, government departments, individuals and small-scale miners, and has a market capitalization of A$2.96 billion.

Operations: Codan’s revenue segments include communications at A$326.91 million and metal detection at A$219.85 million.

Estimated discount to fair value: 10.3%

Codan Limited, recently added to the S&P/ASX 200 Index, reported strong financial results with sales of A$550.46 million and net income of A$81.39 million for fiscal year 2024. The company is trading at 16.33 AU dollars, which is below the estimated fair value of AU $18.21, suggesting it may be undervalued on a cash flow basis. With earnings growth forecast at 17.6% per annum, Codan’s growth prospects outpace expected growth rates of the broader Australian market.

The story continues

Review: IDP Education Limited specializes in placing students in educational institutions in Australia, the United Kingdom, the United States, Canada, New Zealand and Ireland and has a market capitalization of A$4.44 billion.

Operations: The company’s revenue from education services – education and training services is AUD 1.04 billion.

Estimated discount to fair value: 42.8%

IDP Education is valued at A$15.95, well below its estimated fair value of A$27.89, indicating it is undervalued based on a discounted cash flow analysis. Despite forecast revenue growth of 7.4% per year and earnings growth of 14.1% per year, the latest financial results showed net income falling to A$132.75 million from A$148.52 million last year, on diluted earnings per share falling to A$0.4758 from A$0.5328 previously.

Review: Mader Group Limited (ASX:MAD) is a contracting company offering specialist technical services to the mining, energy and industrial sectors both in Australia and overseas, with a market capitalization of A$1.06 billion.

Operations: Mader Group’s revenues from HR and outsourcing services amount to AUD 774.47 million.

Estimated discount to fair value: 49.7%

Mader Group is trading at A$5.24, well below its estimated fair value of A$10.41, highlighting its undervaluation based on a discounted cash flow analysis. The company reported strong financial results with revenue of A$774.47 million and net income of A$50.42 million for fiscal year 2024, reflecting significant year-on-year growth. Analysts forecast continued strong earnings growth of 13.5% annually, outperforming the broader Australian market’s growth of 12.1%. Its recent inclusion in the S&P Global BMI Index further highlights its potential.

Let it happen

Curious about other options?

This article by Simply Wall St is of a general nature. We comment based on historical data and analyst forecasts, using only an unbiased methodology, and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative content. Simply Wall St has no position in any of the stocks mentioned.

The companies discussed in this article are ASX:CDA ASX:IEL and ASX:MAD.

Have an opinion on this article? Worried about content? Contact us directly. You can also send an email to [email protected]