All You Need To Know About Coronado Global Resources Inc.'s (ASX:CRN) Financial Health
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Mid-caps stocks, like Coronado Global Resources Inc. (ASX:CRN) with a market capitalization of AU$2.9b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. Let’s take a look at CRN’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Don’t forget that this is a general and concentrated examination of Coronado Global Resources's financial health, so you should conduct further analysis into CRN here.
See our latest analysis for Coronado Global Resources
Does CRN Produce Much Cash Relative To Its Debt?
CRN has shrunk its total debt levels in the last twelve months, from US$148m to US$16m , which also accounts for long term debt. With this debt payback, CRN currently has US$125m remaining in cash and short-term investments to keep the business going. Moreover, CRN has generated cash from operations of US$365m in the last twelve months, leading to an operating cash to total debt ratio of 2340%, signalling that CRN’s operating cash is sufficient to cover its debt.
Does CRN’s liquid assets cover its short-term commitments?
With current liabilities at US$378m, it appears that the company has been able to meet these obligations given the level of current assets of US$516m, with a current ratio of 1.36x. The current ratio is the number you get when you divide current assets by current liabilities. For Metals and Mining companies, this ratio is within a sensible range since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Is CRN’s debt level acceptable?
With a debt-to-equity ratio of 1.2%, CRN's debt level is relatively low. This range is considered safe as CRN is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. We can check to see whether CRN is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In CRN's, case, the ratio of 6.41x suggests that interest is appropriately covered, which means that debtors may be willing to loan the company more money, giving CRN ample headroom to grow its debt facilities.
Next Steps:
CRN’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. Keep in mind I haven't considered other factors such as how CRN has been performing in the past. You should continue to research Coronado Global Resources to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CRN’s future growth? Take a look at our free research report of analyst consensus for CRN’s outlook.
Valuation: What is CRN 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 CRN 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
