Stocks with market capitalization between $2B and $10B, such as ManTech International Corporation (NASDAQ:MANT) with a size of US$2.2b, do not attract as much attention from the investing community as do the small-caps and large-caps. Despite this, commonly overlooked mid-caps have historically produced better risk-adjusted returns than their small and large-cap counterparts. This article will examine MANT’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. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into MANT here.
MANT’s Debt (And Cash Flows)
MANT's debt levels have fallen from US$31m to US$7.5m over the last 12 months – this includes long-term debt. With this debt repayment, the current cash and short-term investment levels stands at US$5.3m to keep the business going. On top of this, MANT has produced US$93m in operating cash flow over the same time period, leading to an operating cash to total debt ratio of 1246%, signalling that MANT’s debt is appropriately covered by operating cash.
Can MANT meet its short-term obligations with the cash in hand?
With current liabilities at US$243m, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.81x. The current ratio is the number you get when you divide current assets by current liabilities. Usually, for IT companies, this is a suitable ratio as there's enough of a cash buffer without holding too much capital in low return investments.
Is MANT’s debt level acceptable?
What is considered a high debt-to-equity ratio differs depending on the industry, because some industries tend to utilize more debt financing than others. As a rule of thumb, a financially healthy mid-cap should have a ratio less than 40%. The good news for investors is that ManTech International has virtually no debt. This means it has been running its business utilising funding from primarily its equity capital, which is rather impressive. Investors' risk associated with debt is virtually non-existent with MANT, and the company has plenty of headroom and ability to raise debt should it need to in the future.
MANT’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. Furthermore, the company will be able to pay all of its upcoming liabilities from its current short-term assets. I admit this is a fairly basic analysis for MANT's financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research ManTech International to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MANT’s future growth? Take a look at our free research report of analyst consensus for MANT’s outlook.
- Valuation: What is MANT 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 MANT 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 email@example.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.