mybet Holding SE (FRA:A2LQ00) is a small-cap stock with a market capitalization of €3.67m. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Given that A2LQ00 is not presently profitable, it’s crucial to evaluate the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Though, given that I have not delve into the company-specifics, I recommend you dig deeper yourself into A2LQ00 here.
How does A2LQ00’s operating cash flow stack up against its debt?
A2LQ00’s debt levels surged from €1.41m to €1.48m over the last 12 months – this includes both the current and long-term debt. With this growth in debt, A2LQ00 currently has €5.10m remaining in cash and short-term investments for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. For this article’s sake, I won’t be looking at this today, but you can take a look at some of A2LQ00’s operating efficiency ratios such as ROA here.
Does A2LQ00’s liquid assets cover its short-term commitments?
With current liabilities at €6.89m, the company is not able to meet these obligations given the level of current assets of €6.69m, with a current ratio of 0.97x below the prudent level of 3x.
Does A2LQ00 face the risk of succumbing to its debt-load?A2LQ00’s level of debt is appropriate relative to its total equity, at 16.40%. A2LQ00 is not taking on too much debt commitment, which may be constraining for future growth. A2LQ00’s risk around capital structure is low, and the company has the headroom and ability to raise debt should it need to in the future.
Although A2LQ00’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. In addition to this, its low liquidity raises concerns over whether current asset management practices are properly implemented for the small-cap. Keep in mind I haven’t considered other factors such as how A2LQ00 has been performing in the past. You should continue to research mybet Holding to get a more holistic view of the stock by looking at:
- Historical Performance: What has A2LQ00’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 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.