Investors are always looking for growth in small-cap stocks like mybet Holding SE (DB:A2LQ00), with a market cap of €8.63M. However, an important fact which most ignore is: how financially healthy is the business? Since A2LQ00 is loss-making right now, it’s crucial to assess the current state of its operations and pathway to profitability. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength. Nevertheless, given that I have not delve into the company-specifics, I’d encourage you to dig deeper yourself into A2LQ00 here.
How does A2LQ00’s operating cash flow stack up against its debt?
A2LQ00 has shrunken its total debt levels in the last twelve months, from €3.82M to €2.47M , which is made up of current and long term debt. With this debt repayment, the current cash and short-term investment levels stands at €1.06M , ready to deploy 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 A2LQ00’s operating efficiency ratios such as ROA here.
Can A2LQ00 meet its short-term obligations with the cash in hand?
At the current liabilities level of €8.30M liabilities, the company has not maintained a sufficient level of current assets to meet its obligations, with the current ratio last standing at 0.96x, which is below the prudent industry ratio of 3x.
Can A2LQ00 service its debt comfortably?With a debt-to-equity ratio of 16.40%, A2LQ00’s debt level may be seen as prudent. A2LQ00 is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. Investors’ risk associated with debt is very low with A2LQ00, and the company has plenty of headroom and ability to raise debt should it need to in the future.
A2LQ00’s low debt is also met with low coverage. This indicates room for improvement as its cash flow covers less than a quarter of its borrowings, which means its operating efficiency could be better. In addition to this, its lack of liquidity raises questions over current asset management practices for the small-cap. I admit this is a fairly basic analysis for A2LQ00’s financial health. Other important fundamentals need to be considered alongside. 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.