Is Thales SA.’s (EPA:HO) Balance Sheet A Threat To Its Future?
Investors pursuing a solid, dependable stock investment can often be led to Thales SA. (ENXTPA:HO), a large-cap worth €20.59B. Big corporations are much sought after by risk-averse investors who find diversified revenue streams and strong capital returns attractive. However, its financial health remains the key to continued success. This article will examine Thales’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 high-level overview, so I encourage you to look further into HO here. Check out our latest analysis for Thales
How much cash does HO generate through its operations?
HO’s debt levels surged from €1.55B to €1.66B over the last 12 months , which comprises of short- and long-term debt. With this rise in debt, HO currently has €4.61B remaining in cash and short-term investments , ready to deploy into the business. Additionally, HO has generated cash from operations of €1.71B over the same time period, leading to an operating cash to total debt ratio of 102.94%, signalling that HO’s operating cash is sufficient to cover its debt. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In HO’s case, it is able to generate 1.03x cash from its debt capital.
Does HO’s liquid assets cover its short-term commitments?
With current liabilities at €13.91B, it seems that the business has been able to meet these commitments with a current assets level of €14.82B, leading to a 1.07x current account ratio. For Aerospace & Defense companies, this ratio is within a sensible range as there’s enough of a cash buffer without holding too capital in low return investments.
Is HO’s debt level acceptable?
With debt at 29.96% of equity, HO may be thought of as appropriately levered. This range is considered safe as HO is not taking on too much debt obligation, which can be restrictive and risky for equity-holders.
Next Steps:
HO’s high cash coverage and appropriate debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure HO has company-specific issues impacting its capital structure decisions. You should continue to research Thales to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for HO’s future growth? Take a look at our free research report of analyst consensus for HO’s outlook.
Valuation: What is HO 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 HO 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.
