Mid-caps stocks, like The Hain Celestial Group Inc (NASDAQ:HAIN) with a market capitalization of US$3.19b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. Despite this, commonly overlooked mid-caps have historically produced better risk-adjusted returns than their small and large-cap counterparts. HAIN’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. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into HAIN here. View out our latest analysis for Hain Celestial Group
How does HAIN’s operating cash flow stack up against its debt?
Over the past year, HAIN has reduced its debt from US$862.68m to US$750.15m , which comprises of short- and long-term debt. With this reduction in debt, HAIN’s cash and short-term investments stands at US$146.99m , ready to deploy into the business. Additionally, HAIN has generated US$216.62m in operating cash flow over the same time period, leading to an operating cash to total debt ratio of 28.88%, indicating that HAIN’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 HAIN’s case, it is able to generate 0.29x cash from its debt capital.
Can HAIN pay its short-term liabilities?
At the current liabilities level of US$340.49m liabilities, it appears that the company has been able to meet these obligations given the level of current assets of US$874.78m, with a current ratio of 2.57x. Usually, for Food companies, this is a suitable ratio since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Does HAIN face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 39.94%, HAIN’s debt level may be seen as prudent. This range is considered safe as HAIN is not taking on too much debt obligation, which may be constraining for future growth. We can test if HAIN’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For HAIN, the ratio of 8.44x suggests that interest is appropriately covered, which means that lenders may be less hesitant to lend out more funding as HAIN’s high interest coverage is seen as responsible and safe practice.
HAIN’s high cash coverage and appropriate debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. Furthermore, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure HAIN has company-specific issues impacting its capital structure decisions. I suggest you continue to research Hain Celestial Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HAIN’s future growth? Take a look at our free research report of analyst consensus for HAIN’s outlook.
- Valuation: What is HAIN 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 HAIN 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.