Mid-caps stocks, like ANGI Homeservices Inc (NASDAQ:ANGI) with a market capitalization of $4.99B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. However, generally ignored mid-caps have historically delivered better risk-adjusted returns than the two other categories of stocks. I recommend you look at the following hurdles to assess ANGI’s financial health. View our latest analysis for ANGI Homeservices
Is ANGI’s debt level acceptable?
A substantially higher debt poses a significant threat to a company’s profitability during a downturn. In the case of ANGI, the debt-to-equity ratio is 7.48%, which means debt is low and does not pose any significant threat to the company’s operations.
Can ANGI pay its short-term liabilities?
Debt to equity ratio is an important aspect of financial strength. But if the company has a substantial amount of cash on its balance sheet, that should allay some fear of a debt overhang and increase the chance of meeting upcoming liabilities. In order to measure liquidity, we must compare ANGI’s current assets with its upcoming liabilities. Our analysis shows that ANGI does not have enough liquid assets on hand to meet its upcoming liabilities. Though this is a common practice, since cash is better utilized invested in the business or returned to shareholders, it does raise some concerns for investors should adverse events arise.
Are you a shareholder? Although ANGI’s debt level is relatively low, it has the ability to efficiently utilise its borrowings to generate ample cash flow coverage. Since ANGI’s financial position may be different in the future, I encourage researching market expectations for ANGI’s future growth on our free analysis platform.
Are you a potential investor? Although investors should analyse the serviceability of debt, it shouldn’t be viewed in isolation of other factors. Ultimately, debt is often used to fund or accelerate new projects that are expected to improve a company’s growth trajectory in the longer term. ANGI’s Return on Capital Employed (ROCE) in order to see management’s track record at deploying funds in high-returning projects.
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.