Advertisement
U.S. markets open in 1 hour 15 minutes
  • S&P Futures

    5,308.25
    0.00 (0.00%)
     
  • Dow Futures

    40,161.00
    +17.00 (+0.04%)
     
  • Nasdaq Futures

    18,504.75
    +1.00 (+0.01%)
     
  • Russell 2000 Futures

    2,142.40
    +4.00 (+0.19%)
     
  • Crude Oil

    82.43
    +1.08 (+1.33%)
     
  • Gold

    2,233.00
    +20.30 (+0.92%)
     
  • Silver

    24.69
    -0.06 (-0.23%)
     
  • EUR/USD

    1.0791
    -0.0039 (-0.36%)
     
  • 10-Yr Bond

    4.1960
    0.0000 (0.00%)
     
  • Vix

    13.04
    +0.26 (+2.03%)
     
  • GBP/USD

    1.2621
    -0.0017 (-0.14%)
     
  • USD/JPY

    151.3260
    +0.0800 (+0.05%)
     
  • Bitcoin USD

    70,472.86
    +208.62 (+0.30%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.37
    +20.39 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

All You Need To Know About Varian Medical Systems, Inc.’s (NYSE:VAR) Financial Health

Varian Medical Systems, Inc. (NYSE:VAR), a large-cap worth US$11b, comes to mind for investors seeking a strong and reliable stock investment. Most investors favour these big stocks due to their strong balance sheet and high market liquidity, meaning there are an abundance of stock in the public market available for trading. These companies are resilient in times of low liquidity and are not as strongly impacted by interest rate hikes as companies with lots of debt. Assessing the most recent data for VAR, I will take you through the key ratios to measure financial health, in particular, its solvency and liquidity.

View our latest analysis for Varian Medical Systems

Does VAR face the risk of succumbing to its debt-load?

A debt-to-equity ratio threshold varies depending on what industry the company operates, since some requires more debt financing than others. A ratio below 40% for large-cap stocks is considered as financially healthy, as a rule of thumb. For Varian Medical Systems, 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 VAR, and the company has plenty of headroom and ability to raise debt should it need to in the future.

NYSE:VAR Historical Debt December 13th 18
NYSE:VAR Historical Debt December 13th 18

Does VAR’s liquid assets cover its short-term commitments?

Since Varian Medical Systems 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. At the current liabilities level of US$1.3b, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.63x. Usually, for Medical Equipment companies, this is a suitable ratio since there’s a sufficient cash cushion without leaving too much capital idle or in low-earning investments.

Next Steps:

VAR has zero debt in addition to ample cash to cover its short-term liabilities. Its strong balance sheet reduces risk for the company and shareholders. Keep in mind I haven’t considered other factors such as how VAR has performed in the past. I suggest you continue to research Varian Medical Systems to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for VAR’s future growth? Take a look at our free research report of analyst consensus for VAR’s outlook.

  2. Valuation: What is VAR 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 VAR 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.

Advertisement