As the ASX200 closed up 0.69% at 8,126 points, sectors like IT and Real Estate led gains while Utilities and Energy lagged behind. In this fluctuating market environment, identifying undervalued stocks trading significantly below their intrinsic value can offer potential opportunities for investors looking to capitalize on market inefficiencies.

Top 10 Undervalued Stocks Based On Cash Flows In Australia

Click here to see the full list of 35 stocks from our Undervalued ASX Stocks Based On Cash Flows screener.

Let's explore several standout options from the results in the screener.

Integral Diagnostics

Overview: Integral Diagnostics Limited is a healthcare services company that provides diagnostic imaging services to medical professionals and their patients in Australia and New Zealand, with a market cap of A$900.76 million.

Operations: The company's revenue is primarily derived from the operation of diagnostic imaging facilities, amounting to A$491.32 million.

Estimated Discount To Fair Value: 41%

Integral Diagnostics appears undervalued, trading at A$2.42, below its estimated fair value of A$4.1. Although its earnings are currently impacted by large one-off items, forecasts suggest significant annual profit growth of 40.6%, outpacing the Australian market's 11.7%. Despite past shareholder dilution and interest payments not well covered by earnings, the company's revenue growth is expected to surpass the market average at 16.4% annually, drawing private equity interest amid recent M&A rumors.

• The growth report we've compiled suggests that Integral Diagnostics' future prospects could be on the up.
• Dive into the specifics of Integral Diagnostics here with our thorough financial health report.

James Hardie Industries

Overview: James Hardie Industries plc manufactures and sells fiber cement, fiber gypsum, and cement bonded building products for construction applications in various regions including the United States, Australia, Europe, New Zealand, and the Philippines with a market cap of A$15.90 billion.

Operations: The company's revenue is primarily derived from its North America Fiber Cement segment at $2.88 billion, followed by Asia Pacific Fiber Cement at $543.30 million, and Europe Building Products at $488 million.

Estimated Discount To Fair Value: 35%

James Hardie Industries is trading at A$37, significantly below its estimated fair value of A$56.91, making it highly undervalued based on discounted cash flows. Earnings are projected to grow 17.5% annually, outpacing the Australian market's 11.7%, while revenue growth is expected at 8.5%. Recent acquisition plans with The AZEK Company Inc., and a strategic agreement with David Weekley Homes, highlight potential for future expansion despite recent earnings stagnation compared to last year.

• In light of our recent growth report, it seems possible that James Hardie Industries' financial performance will exceed current levels.
• Click here to discover the nuances of James Hardie Industries with our detailed financial health report.

Sandfire Resources

Overview: Sandfire Resources Limited is a mining company focused on the exploration, evaluation, and development of mineral tenements and projects, with a market cap of A$4.57 billion.

Operations: The company's revenue is primarily derived from its Motheo Copper Project ($482.04 million), MATSA Copper Operations ($604.43 million), and Degrussa Copper Operations ($2.89 million).

Estimated Discount To Fair Value: 44%

Sandfire Resources is trading at A$9.97, significantly below its estimated fair value of A$17.82, suggesting it is undervalued based on discounted cash flows. The company's earnings are forecast to grow 32.7% annually, surpassing the Australian market's 11.7%, while revenue growth is expected at 8%. Recently turning profitable with a net income of US$51.5 million for H1 2025, Sandfire shows potential for robust financial performance despite a forecasted low return on equity of 12.9%.

• The analysis detailed in our Sandfire Resources growth report hints at robust future financial performance.
• Take a closer look at Sandfire Resources' balance sheet health here in our report.

Taking Advantage

• Get an in-depth perspective on all 35 Undervalued ASX Stocks Based On Cash Flows by using our screener here.
• Shareholder in one or more of these companies? Ensure you're never caught off-guard by adding your portfolio in Simply Wall St for timely alerts on significant stock developments.
• Simply Wall St is a revolutionary app designed for long-term stock investors, it's free and covers every market in the world.

Ready To Venture Into Other Investment Styles?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
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• 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:IDX ASX:JHX and ASX:SFR.

This article was originally published by Simply Wall St.

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