Small-cap and large-cap companies receive a lot of attention from investors, but mid-cap stocks like Noble Midstream Partners LP (NYSE:NBLX), with a market cap of US$2.06B, are often out of the spotlight. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. Let’s take a look at NBLX’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into NBLX here. Check out our latest analysis for Noble Midstream Partners
How does NBLX’s operating cash flow stack up against its debt?
NBLX’s debt levels surged from US$4.79M to US$88.14M over the last 12 months – this includes both the current and long-term debt. With this growth in debt, NBLX currently has US$18.03M remaining in cash and short-term investments , ready to deploy into the business. On top of this, NBLX has produced cash from operations of US$166.23M over the same time period, leading to an operating cash to total debt ratio of 188.59%, indicating that NBLX’s debt is appropriately covered by operating cash. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In NBLX’s case, it is able to generate 1.89x cash from its debt capital.
Does NBLX’s liquid assets cover its short-term commitments?
At the current liabilities level of US$114.39M liabilities, the company has not been able to meet these commitments with a current assets level of US$86.10M, leading to a 0.75x current account ratio. which is under the appropriate industry ratio of 3x.
Does NBLX face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 14.30%, NBLX’s debt level may be seen as prudent. NBLX is not taking on too much debt commitment, which may be constraining for future growth.
NBLX’s high cash coverage and conservative debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. But it is still important for shareholders to understand why the company isn’t increasing its cheaper cost of capital to fund future growth, especially when liquidity may also be an issue. I admit this is a fairly basic analysis for NBLX’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Noble Midstream Partners to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NBLX’s future growth? Take a look at our free research report of analyst consensus for NBLX’s outlook.
- Historical Performance: What has NBLX’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.