Is Surgutneftegas Public Joint Stock Company’s (MCX:SNGS) Liquidity Good Enough?
Surgutneftegas Public Joint Stock Company (MCX:SNGS), a large-cap worth RUруб949.9b, 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 firms won’t be left high and dry if liquidity dries up, and they will be relatively unaffected by rises in interest rates. Today I will analyse the latest financial data for SNGS to determine is solvency and liquidity and whether the stock is a sound investment.
View our latest analysis for Surgutneftegas
Is SNGS’s debt level acceptable?
Debt-to-equity ratio standards differ between industries, as some are more capital-intensive than others, meaning they need more capital to carry out core operations. As a rule of thumb, a financially healthy large-cap should have a ratio less than 40%. For SNGS, the debt-to-equity ratio is zero, meaning that the company has no debt. 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 SNGS, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Can SNGS pay its short-term liabilities?
Since Surgutneftegas 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. But another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. With current liabilities at RUруб354.6b, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 3.41x. However, many consider anything above 3x to be quite high and could mean that SNGS has too much idle capital in low-earning investments.
Next Steps:
SNGS has no debt as well as ample cash to cover its short-term commitments. Its strong balance sheet reduces risk for the company and shareholders. This is only a rough assessment of financial health, and I’m sure SNGS has company-specific issues impacting its capital structure decisions. I suggest you continue to research Surgutneftegas to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SNGS’s future growth? Take a look at our free research report of analyst consensus for SNGS’s outlook.
Valuation: What is SNGS 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 SNGS 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 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.
