How Financially Strong Is Kyocera Corporation (NYSE:KYO)?
Investors pursuing a solid, dependable stock investment can often be led to Kyocera Corporation (NYSE:KYO), a large-cap worth US$21.80B. Risk-averse investors who are attracted to diversified streams of revenue and strong capital returns tend to seek out these large companies. But, the health of the financials determines whether the company continues to succeed. This article will examine Kyocera’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into KYO here. See our latest analysis for Kyocera
Does KYO produce enough cash relative to debt?
Over the past year, KYO has ramped up its debt from JP¥24.84B to JP¥29.68B , which comprises of short- and long-term debt. With this growth in debt, KYO’s cash and short-term investments stands at JP¥621.74B , ready to deploy into the business. Moreover, KYO has generated cash from operations of JP¥158.95B over the same time period, resulting in an operating cash to total debt ratio of 535.65%, indicating that KYO’s operating cash is sufficient to cover its debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In KYO’s case, it is able to generate 5.36x cash from its debt capital.
Can KYO meet its short-term obligations with the cash in hand?
At the current liabilities level of JP¥419.99B liabilities, it seems that the business has been able to meet these obligations given the level of current assets of JP¥1.48T, with a current ratio of 3.52x. Though, anything above 3x is considered high and could mean that KYO has too much idle capital in low-earning investments.
Is KYO’s debt level acceptable?
Debt-to-equity ratio standards differ between industries, as some are more capital-intensive than others, meaning they need more capital to carry out core operations. As a rule of thumb, a financially healthy large-cap should have a ratio less than 40%. KYO’s level of debt is low relative to its total equity, at 1.22%. This range is considered safe as KYO is not taking on too much debt obligation, which may be constraining for future growth.
Next Steps:
KYO’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. Furthermore, the company exhibits an ability to meet its near-term obligations, which isn’t a big surprise for a large-cap. I admit this is a fairly basic analysis for KYO’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Kyocera to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for KYO’s future growth? Take a look at our free research report of analyst consensus for KYO’s outlook.
Valuation: What is KYO 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 KYO 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.
