Mid-caps stocks, like Enbridge Income Fund Holdings Inc (TSX:ENF) with a market capitalization of CA$4.95B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. ENF’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 Amazon’s financial health, so you should conduct further analysis into ENF here. Check out our latest analysis for Enbridge Income Fund Holdings
Can ENF service its debt comfortably?
Debt-to-equity ratio standards differ between industries, as some are more capital-intensive than others, meaning they need more capital to carry out core operations. A ratio below 40% for mid-cap stocks is considered as financially healthy, as a rule of thumb. For ENF, the debt-to-equity ratio is zero, meaning that the company has no debt. This means it has been running its business utilising funding from only its equity capital, which is rather impressive. Investors’ risk associated with debt is virtually non-existent with ENF, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Can ENF meet its short-term obligations with the cash in hand?
Given zero long-term debt on its balance sheet, Enbridge Income Fund Holdings has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. However, another measure of financial health is its short-term obligations, which is known as liquidity. These include payments to suppliers, employees and other stakeholders. With current liabilities at CA$31.00M, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 4.23x. Though, a ratio greater than 3x may be considered as too high, as ENF could be holding too much capital in a low-return investment environment.
ENF has no debt in addition to ample cash to cover its short-term commitments. Its safe operations reduces risk for the company and shareholders, though, some level of debt could also ramp up earnings growth and operational efficiency. I admit this is a fairly basic analysis for ENF’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Enbridge Income Fund Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ENF’s future growth? Take a look at our free research report of analyst consensus for ENF’s outlook.
- Valuation: What is ENF 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 ENF 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.