Itâs not often that investors can find companies that have provided growth in the past and will provide even more in the future. Usually, the growth is done. Over. Finished. We are then treated to a more stable outlook.

Yet that hasnât been the case Saputo (TSX:SAP). Saputo stock may have climbed 24% in the last three months. But it still looks undervalued. Letâs get into why.

Why the climb?

Despite the climb, value remains for Saputo stock. Saputoâs strategic divestiture of two Australian milk processing facilities reflects its focus on higher-margin businesses and operational efficiency. This move is expected to boost profitability and streamline operations, positioning the company for better financial performance in the future.

Saputoâs fourth-quarter (Q4) 2024 earnings report highlighted earnings per share (EPS) of $0.37, meeting analyst expectations, with revenues of $4.55 billion, surpassing the estimated $4.25 billion. This consistent financial strength demonstrates the companyâs solid market position and efficient operations.

Investors should look forward to Saputoâs upcoming earnings release in August 2024, which could provide further evidence of its undervaluation. Additionally, the planned chief executive officer transition to executive chair is expected to bring fresh strategic insights while maintaining leadership stability.

Value remains

While investors may believe the best is over, there are still reasons to buy. Saputo's attractive dividend yield remains a significant draw for income-focused investors. The company declared an annual dividend of $0.74 per share, which translates to an annual yield of approximately 2.37%. The ability to sustain and potentially grow dividends is a testament to Saputo's solid cash flow and financial stability.

Significant insider buying has also contributed to the positive sentiment around Saputo's stock. Senior officers within the company have purchased substantial amounts of stock in recent months, signalling their confidence in the company's future prospects. Insider buying is often viewed as a strong indicator of a company's health and potential for growth.

Whatâs more, analysts continue to upgrade the stock. Itâs now rated as a âBuy,â with recent price targets changing upwards. As of writing, the consensus price target is now at about $35. Thatâs a potential upside of about 13% at the time of writing this article.

Granted, the company does trade at 49.62 times earnings as of writing. However, it also offers value in other areas. For instance, it trades at just 0.76 times sales and 1.88 times book value. So, with shares up, and a strong bottom line, it continues to be a strong option.

Bottom line

Saputo's stock has climbed over the last three months due to its impressive financial performance, strategic divestitures, positive analyst recommendations, attractive dividend yield, and significant insider buying. However, the company still offers value to come — especially as cash flows in, inflation drops, and the company provides more investment opportunities.

These factors collectively paint a picture of a company that is not only performing well but is also positioned for continued growth, making it an attractive option for investors. So, if youâre looking for a dividend stock that could certainly bring in dividends and growth, consider Saputo stock on the TSX today.

The post Saputo Stock Rose 24% in 90 Days: Here's Why It's Still Undervalued appeared first on The Motley Fool Canada.