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Small-caps and large-caps are wildly popular among investors; however, mid-cap stocks, such as Österreichische Post AG (VIE:POST) with a market-capitalization of €2.3b, rarely draw their attention. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. Today we will look at POST’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into POST here.
POST’s Debt (And Cash Flows)
POST has built up its total debt levels in the last twelve months, from €6.8m to €10m , which accounts for long term debt. With this increase in debt, POST currently has €355m remaining in cash and short-term investments , ready to be used for running the business. On top of this, POST has generated €296m in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 2873%, indicating that POST’s operating cash is sufficient to cover its debt.
Can POST pay its short-term liabilities?
With current liabilities at €560m, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.25x. The current ratio is calculated by dividing current assets by current liabilities. For Logistics companies, this ratio is within a sensible range since there's a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Is POST’s debt level acceptable?
With a debt-to-equity ratio of 1.5%, POST's debt level is relatively low. This range is considered safe as POST is not taking on too much debt obligation, which may be constraining for future growth.
POST has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at a safe level. In addition to this, the company will be able to pay all of its upcoming liabilities from its current short-term assets. This is only a rough assessment of financial health, and I'm sure POST has company-specific issues impacting its capital structure decisions. I recommend you continue to research Österreichische Post to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for POST’s future growth? Take a look at our free research report of analyst consensus for POST’s outlook.
- Valuation: What is POST 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 POST 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 firstname.lastname@example.org. 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.