What You Must Know About comScore Inc’s (NASDAQ:SCOR) Financial Strength
Investors are always looking for growth in small-cap stocks like comScore Inc (NASDAQ:SCOR), with a market cap of US$1.17b. However, an important fact which most ignore is: how financially healthy is the business? Companies operating in the Internet industry, especially ones that are currently loss-making, tend to be high risk. Evaluating financial health as part of your investment thesis is essential. I believe these basic checks tell most of the story you need to know. However, I know these factors are very high-level, so I’d encourage you to dig deeper yourself into SCOR here.
Does SCOR produce enough cash relative to debt?
SCOR has shrunken its total debt levels in the last twelve months, from US$20.91m to US$8.35m , which comprises of short- and long-term debt. With this debt repayment, SCOR’s cash and short-term investments stands at US$37.86m for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. 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 SCOR’s operating efficiency ratios such as ROA here.
Can SCOR pay its short-term liabilities?
Looking at SCOR’s most recent US$250.49m liabilities, it appears that the company has not been able to meet these commitments with a current assets level of US$179.55m, leading to a 0.72x current account ratio. which is under the appropriate industry ratio of 3x.
Does SCOR face the risk of succumbing to its debt-load?
With debt at 24.19% of equity, SCOR may be thought of as appropriately levered. This range is considered safe as SCOR is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. Risk around debt is very low for SCOR, and the company also has the ability and headroom to increase debt if needed going forward.
Next Steps:
SCOR’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. In addition to this, its low liquidity raises concerns over whether current asset management practices are properly implemented for the small-cap. Keep in mind I haven’t considered other factors such as how SCOR has been performing in the past. You should continue to research comScore to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SCOR’s future growth? Take a look at our free research report of analyst consensus for SCOR’s outlook.
Valuation: What is SCOR 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 SCOR 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.
