Investors are always looking for growth in small-cap stocks like Manitex Capital Inc (CVE:MNX), with a market cap of CA$4m. However, an important fact which most ignore is: how financially healthy is the business? Companies operating in the Healthcare industry, especially ones that are currently loss-making, are inclined towards being higher risk. Assessing first and foremost the financial health is crucial. I believe these basic checks tell most of the story you need to know. Nevertheless, I know these factors are very high-level, so I recommend you dig deeper yourself into MNX here.
How much cash does MNX generate through its operations?
Over the past year, MNX has reduced its debt from CA$4m to CA$2m , which comprises of short- and long-term debt. With this debt payback, MNX’s cash and short-term investments stands at CA$5m for investing into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, though these low levels of cash means that operational efficiency is worth a look. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of MNX’s operating efficiency ratios such as ROA here.
Can MNX pay its short-term liabilities?
With current liabilities at CA$3m, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.37x. For Healthcare companies, this ratio is within a sensible range as there’s enough of a cash buffer without holding too much capital in low return investments.
Is MNX’s debt level acceptable?
MNX’s level of debt is appropriate relative to its total equity, at 18%. MNX is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. Risk around debt is very low for MNX, and the company also has the ability and headroom to increase debt if needed going forward.
MNX’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits proper management of current assets and upcoming liabilities. Keep in mind I haven’t considered other factors such as how MNX has been performing in the past. I recommend you continue to research Manitex Capital to get a more holistic view of the stock by looking at:
- Historical Performance: What has MNX’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 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.
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