Mid-caps stocks, like bluebird bio Inc (NASDAQ:BLUE) with a market capitalization of USD $6.00B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. Surprisingly though, when accounted for risk, mid-caps have delivered better returns compared to the two other categories of stocks. Mid-caps are found to be more volatile than the large-caps but safer than small-caps, largely due to their weaker balance sheet. I’ve put together a small checklist, which I believe provides a ballpark estimate of their financial health status. Check out our latest analysis for bluebird bio
Can BLUE service its debt comfortably?
A substantially higher debt poses a significant threat to a company’s profitability during a downturn. In the case of BLUE, the debt-to-equity ratio is 12.83%, which indicates that its debt is at an acceptable level.
Can BLUE pay its short-term liabilities?
Another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. If an adverse event occurs, the company may be forced to pay these immediate expenses with its liquid assets. In order to measure liquidity, we must compare BLUE’s current assets with its upcoming liabilities. Our analysis shows that BLUE is able to meet its upcoming commitments with its cash and other short-term assets, which lessens our concerns for the company’s business operations should any unfavourable circumstances arise.
BLUE’s exhibits relatively safe capital practice with low debt levels as well as ample cash to cover its near-term liabilities such as salary and supplier payments. This is likely to reduce some risk for the company and its investors. Now that you know to keep debt in mind when putting together your investment thesis, I recommend you check out our latest free analysis report on bluebird bio to see what other factors for BLUE you should consider.
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