Mid-caps stocks, like Etn Fr Colruyt NV (EBR:COLR) with a market capitalization of €6.67b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. This article will examine COLR’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. Don’t forget that this is a general and concentrated examination of Etn. Fr. Colruyt’s financial health, so you should conduct further analysis into COLR here. Check out our latest analysis for Etn. Fr. Colruyt
Does COLR produce enough cash relative to debt?
COLR has built up its total debt levels in the last twelve months, from €27.10m to €0 , which is made up of current and long term debt. With this growth in debt, COLR currently has €241.80m remaining in cash and short-term investments , ready to deploy into the business. Moreover, COLR has generated €497.00m in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 349.26%, indicating that COLR’s debt is appropriately covered by operating cash. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In COLR’s case, it is able to generate 3.49x cash from its debt capital.
Can COLR pay its short-term liabilities?
With current liabilities at €1.78b, it seems that the business is not able to meet these obligations given the level of current assets of €1.37b, with a current ratio of 0.77x below the prudent level of 3x.
Can COLR service its debt comfortably?
COLR’s level of debt is low relative to its total equity, at 6.97%. This range is considered safe as COLR is not taking on too much debt obligation, which may be constraining for future growth.
COLR’s high cash coverage and conservative debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. But it is still important for shareholders to understand why the company isn’t increasing its cheaper cost of capital to fund future growth, especially if meeting short-term obligations could also bring about issues. Keep in mind I haven’t considered other factors such as how COLR has been performing in the past. You should continue to research Etn. Fr. Colruyt to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for COLR’s future growth? Take a look at our free research report of analyst consensus for COLR’s outlook.
- Valuation: What is COLR 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 COLR 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.