Is Antares Pharma Inc’s (NASDAQ:ATRS) Balance Sheet A Threat To Its Future?
While small-cap stocks, such as Antares Pharma Inc (NASDAQ:ATRS) with its market cap of US$421.86m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Companies operating in the Medical Equipment industry, especially ones that are currently loss-making, are more likely to be higher risk. So, understanding the company’s financial health becomes vital. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Though, I know these factors are very high-level, so I’d encourage you to dig deeper yourself into ATRS here.
How much cash does ATRS generate through its operations?
Over the past year, ATRS has borrowed debt capital of around US$24.86m comprising of short- and long-term debt. With this growth in debt, ATRS currently has US$31.56m remaining in cash and short-term investments , ready to deploy into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of ATRS’s operating efficiency ratios such as ROA here.
Can ATRS pay its short-term liabilities?
At the current liabilities level of US$15.73m liabilities, it seems that the business has been able to meet these obligations given the level of current assets of US$55.54m, with a current ratio of 3.53x. However, anything about 3x may be excessive, since ATRS may be leaving too much capital in low-earning investments.
Is ATRS’s debt level acceptable?
With debt reaching 88.24% of equity, ATRS may be thought of as relatively highly levered. This is not unusual for small-caps as debt tends to be a cheaper and faster source of funding for some businesses. Though, since ATRS is presently unprofitable, there’s a question of sustainability of its current operations. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
Next Steps:
ATRS’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. Though, the company exhibits proper management of current assets and upcoming liabilities. Keep in mind I haven’t considered other factors such as how ATRS has been performing in the past. I recommend you continue to research Antares Pharma to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ATRS’s future growth? Take a look at our free research report of analyst consensus for ATRS’s outlook.
Historical Performance: What has ATRS’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
