Mid-caps stocks, like Intrexon Corporation (NYSE:XON) with a market capitalization of US$2.46B, 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. XON’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 XON here. Check out our latest analysis for Intrexon
Does XON generate an acceptable amount of cash through operations?
Over the past year, XON has reduced its debt from US$8.77M to US$8.27M , which comprises of short- and long-term debt. With this debt repayment, the current cash and short-term investment levels stands at US$79.67M for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. For this article’s sake, I won’t be looking at this today, but you can take a look at some of XON’s operating efficiency ratios such as ROA here.
Can XON meet its short-term obligations with the cash in hand?
With current liabilities at US$80.17M, it appears that the company has been able to meet these obligations given the level of current assets of US$154.05M, with a current ratio of 1.92x. Usually, for Biotechs companies, this is a suitable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Can XON service its debt comfortably?
XON’s level of debt is low relative to its total equity, at 1.51%. XON is not taking on too much debt commitment, which may be constraining for future growth. Investors’ risk associated with debt is virtually non-existent with XON, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Although XON’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 proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure XON has company-specific issues impacting its capital structure decisions. I recommend you continue to research Intrexon to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for XON’s future growth? Take a look at our free research report of analyst consensus for XON’s outlook.
- Historical Performance: What has XON’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.