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Stocks with market capitalization between $2B and $10B, such as Immunomedics, Inc. ( NASDAQ:IMMU ) with a size of US$2.7b, do not attract as much attention from the investing community as do the small-caps and large-caps. Despite this, commonly overlooked mid-caps have historically produced better risk-adjusted returns than their small and large-cap counterparts. IMMU’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Don’t forget that this is a general and concentrated examination of Immunomedics’s financial health, so you should conduct further analysis into IMMU here .
Does IMMU produce enough cash relative to debt?
IMMU’s debt level has been constant at around US$20m over the previous year – this includes long-term debt. At this constant level of debt, IMMU’s cash and short-term investments stands at US$586m for investing into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, though these low levels of cash means that operational efficiency is worth a look. For this article’s sake, I won’t be looking at this today, but you can assess some of IMMU’s operating efficiency ratios such as ROA here .
Does IMMU’s liquid assets cover its short-term commitments?
At the current liabilities level of US$44m, the company has been able to meet these commitments with a current assets level of US$594m, leading to a 13.45x current account ratio. Having said that, many consider a ratio above 3x to be high.
Can IMMU service its debt comfortably?
With debt at 5.8% of equity, IMMU may be thought of as having low leverage. IMMU is not taking on too much debt commitment, which may be constraining for future growth. Risk around debt is extremely low for IMMU, and the company also has the ability and headroom to increase debt if needed going forward.
Although IMMU’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. I admit this is a fairly basic analysis for IMMU’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Immunomedics to get a more holistic view of the stock by looking at:
- Future Outlook : What are well-informed industry analysts predicting for IMMU’s future growth? Take a look at our free research report of analyst consensus for IMMU’s outlook.
- Valuation : What is IMMU 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 IMMU 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 email@example.com .