Mid-caps stocks, like Cal-Maine Foods Inc (NASDAQ:CALM) with a market capitalization of US$2.09B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. However, history shows that overlooked mid-cap companies have performed better on a risk-adjusted manner than the smaller and larger segment of the market. Let’s take a look at CALM’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into CALM here. Check out our latest analysis for Cal-Maine Foods
How does CALM’s operating cash flow stack up against its debt?
Over the past year, CALM has reduced its debt from US$25.57M to US$10.94M , which is made up of current and long term debt. With this debt payback, the current cash and short-term investment levels stands at US$156.03M , 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 CALM’s operating efficiency ratios such as ROA here.
Does CALM’s liquid assets cover its short-term commitments?
Looking at CALM’s most recent US$64.68M liabilities, it appears that the company has been able to meet these obligations given the level of current assets of US$436.21M, with a current ratio of 6.74x. Though, anything above 3x is considered high and could mean that CALM has too much idle capital in low-earning investments.
Can CALM service its debt comfortably?
With debt at 1.06% of equity, CALM may be thought of as having low leverage. This range is considered safe as CALM is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. CALM’s risk around capital structure is almost non-existent, and the company has the headroom and ability to raise debt should it need to in the future.
Although CALM’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company will be able to pay all of its upcoming liabilities from its current short-term assets. I admit this is a fairly basic analysis for CALM’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Cal-Maine Foods to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for CALM’s future growth? Take a look at our free research report of analyst consensus for CALM’s outlook.
- 2. Valuation: What is CALM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CALM is currently mispriced by the market.
- 3. 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.