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Has ICU Medical Inc (NASDAQ:ICUI) Got Enough Cash?

Mid-caps stocks, like ICU Medical Inc (NASDAQ:ICUI) with a market capitalization of US$5.2b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. Surprisingly though, when accounted for risk, mid-caps have delivered better returns compared to the two other categories of stocks. Let’s take a look at ICUI’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into ICUI here.

See our latest analysis for ICU Medical

Can ICUI service its debt comfortably?

A debt-to-equity ratio threshold varies depending on what industry the company operates, since some requires more debt financing than others. Generally, mid-cap stocks are considered financially healthy if its ratio is below 40%. For ICU Medical, 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 ICUI, and the company has plenty of headroom and ability to raise debt should it need to in the future.

NasdaqGS:ICUI Historical Debt October 26th 18

Can ICUI pay its short-term liabilities?

Since ICU Medical doesn’t have any debt on its balance sheet, it doesn’t have any solvency issues, which is a term 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. With current liabilities at US$202m, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 4.44x. However, anything above 3x may be considered excessive by some investors. They might argue ICUI is leaving too much capital in low-earning investments.

Next Steps:

ICUI has no debt in addition to ample cash to cover its near-term commitments. Its safe operations reduces risk for the company and shareholders, though, some degree of debt may also boost earnings growth and operational efficiency. This is only a rough assessment of financial health, and I’m sure ICUI has company-specific issues impacting its capital structure decisions. You should continue to research ICU Medical to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for ICUI’s future growth? Take a look at our free research report of analyst consensus for ICUI’s outlook.
  2. Valuation: What is ICUI 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 ICUI 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.