Investors are always looking for growth in small-cap stocks like The ExOne Company (NASDAQ:XONE), with a market cap of USD $164.20M. However, an important fact which most ignore is: how financially healthy is the company? There are always disruptions which destabilize an existing industry, in which most small-cap companies are the first casualties. Thus, it becomes utmost important for an investor to test a company’s resilience for such contingencies. In simple terms, I believe these three small calculations tell most of the story you need to know. View our latest analysis for ExOne
Does XONE generate enough cash through operations?
There are many headwinds that come unannounced, such as natural disasters and political turmoil, which can challenge a small business and its ability to adapt and recover. Furthermore, failure to service debt can hurt its reputation, making funding expensive in the future. Fortunately, we can test the company’s capacity to pay back its debtholders without summoning any catastrophes by looking at how much cash it generates from its current operations. XONE’s recent operating cash flow was -5.24 times its debt within the past year. This means what XONE can generate on an annual basis, which is currently a negative value, does not cover what it actually owes its debtors in the near term. This raises a red flag, looking at XONE’s operations at this point in time.
Can XONE pay its short-term liabilities?
What about its commitments to other stakeholders such as payments to suppliers and employees? As cash flow from operation is hindered by adverse events, XONE may need to liquidate its short-term assets to meet these upcoming payments. We test for XONE’s ability to meet these needs by comparing its cash and short-term investments with current liabilities. Our analysis shows that XONE does have enough liquid assets on hand to meet its upcoming liabilities, which lowers our concerns should adverse events arise.
Can XONE service its debt comfortably?
Debt-to-equity ratio tells us how much of the asset debtors could claim if the company went out of business. XONE’s debt-to-equity ratio stands at 2.29%, which means debt is low and does not pose any significant threat to the company’s operations.
Are you a shareholder? Although XONE’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 exhibits an ability to meet its near term obligations should an adverse event occur. Given that its financial position may be different. I recommend keeping abreast of market expectations for XONE’s future growth on our free analysis platform.
Are you a potential investor? ExOne currently has financial flexibility to ramp up growth in the future. Furthermore, its high liquidity ensures the company will continue to operate smoothly should unfavourable circumstances arise. In order to build your conviction in the stock, you need to also analyse XONE’s track record. As a following step, you should take a look at XONE’s past performance analysis on our free platform to conclude on XONE’s financial health.
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.