Mid-caps stocks, like Cheniere Energy Partners LP Holdings LLC (AMEX:CQH) with a market capitalization of US$6.97B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. CQH’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into CQH here. Check out our latest analysis for Cheniere Energy Partners Holdings
Is CQH’s debt level acceptable?
What is considered a high debt-to-equity ratio differs depending on the industry, because some industries tend to utilize more debt financing than others. A ratio below 40% for mid-cap stocks is considered as financially healthy, as a rule of thumb. For Cheniere Energy Partners Holdings, investors should not worry about its debt levels because the company has none! This means it has been running its business utilising funding from only its equity capital, which is rather impressive. Investors’ risk associated with debt is virtually non-existent with CQH, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Can CQH pay its short-term liabilities?
Given zero long-term debt on its balance sheet, Cheniere Energy Partners Holdings has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. However, another measure of financial health is its short-term obligations, which is known as liquidity. These include payments to suppliers, employees and other stakeholders. Looking at CQH’s most recent US$76.00K liabilities, the company has been able to meet these obligations given the level of current assets of US$714.00K, with a current ratio of 9.39x. However, anything about 3x may be excessive, since CQH may be leaving too much capital in low-earning investments.
CQH has zero-debt in addition to ample cash to cover its near-term liabilities. Its safe operations reduces risk for the company and its investors, though, some level of debt may also ramp up earnings growth and operational efficiency. This is only a rough assessment of financial health, and I’m sure CQH has company-specific issues impacting its capital structure decisions. You should continue to research Cheniere Energy Partners Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CQH’s future growth? Take a look at our free research report of analyst consensus for CQH’s outlook.
- Valuation: What is CQH 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 CQH is currently mispriced by the market.
- 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.