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Public Joint Stock Company Gazprom (MCX:GAZP), a large-cap worth RUруб5.1t, 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. In times of low liquidity in the market, these firms won’t be left high and dry. They are also relatively unaffected by increases in interest rates. Using the most recent data for GAZP, I will determine its financial status based on its solvency and liquidity, and assess whether the stock is a safe investment.
GAZP’s Debt (And Cash Flows)
GAZP's debt levels surged from RUруб3.4t to RUруб4.1t over the last 12 months , which accounts for long term debt. With this rise in debt, GAZP currently has RUруб1.9t remaining in cash and short-term investments , ready to be used for running the business. Additionally, GAZP has generated RUруб1.8t in operating cash flow in the last twelve months, leading to an operating cash to total debt ratio of 45%, indicating that GAZP’s current level of operating cash is high enough to cover debt.
Can GAZP pay its short-term liabilities?
Looking at GAZP’s RUруб2.4t in current liabilities, it seems that the business has been able to meet these obligations given the level of current assets of RUруб4.2t, with a current ratio of 1.76x. The current ratio is the number you get when you divide current assets by current liabilities. For Oil and Gas 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 GAZP’s debt level acceptable?
With a debt-to-equity ratio of 28%, GAZP's debt level may be seen as prudent. GAZP is not taking on too much debt commitment, which may be constraining for future growth.
GAZP has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at an appropriate level. Furthermore, the company exhibits an ability to meet its near-term obligations, which isn't a big surprise for a large-cap. Keep in mind I haven't considered other factors such as how GAZP has been performing in the past. I suggest you continue to research Gazprom to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GAZP’s future growth? Take a look at our free research report of analyst consensus for GAZP’s outlook.
- Valuation: What is GAZP 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 GAZP 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.