Should I Invest in HSBC Holdings plc (HSBA)?

HSBC’s total-return potential
Let’s examine five indicators to help judge the quality of the company’s total-return potential:

1. Dividend cover: adjusted earnings covered last year’s dividend around 1.6 times. 3/5

2. Borrowings: net debt is running at just over three times operating profit. 2/5

3. Growth: revenue, earnings and cash flow average out to flat-looking performance. 2/5

4. Price to earnings: a forward 11 or so compares well to growth and yield expectations. 4/5

5. Outlook: good recent trading and a positive outlook. 5/5

Overall, I score HSBC Holdings plc (LON:HSBA) 16 out of 25, which encourages me to believe the firm has some potential to out-pace the wider market’s total return, going forward.

Foolish summary
Although the business-quality metrics seem lackluster, the outlook is positive and recent trading has been good. Given expectations, the valuation seems modest.

The article Should I Invest in HSBC Holdings? originally appeared on Fool.com and is written by Kevin Godbold.

Kevin does not own shares in HSBC Holdings. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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