Small and large cap stocks are widely popular for a variety of reasons, however, mid-cap companies such as CCC SA. (WSE:CCC), with a market cap of ZŁ11.48B, often get neglected by retail investors. 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. Let’s take a look at CCC’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into CCC here. See our latest analysis for CCC
Does CCC generate enough cash through operations?
CCC’s debt levels surged from ZŁ795.50M to ZŁ917.10M over the last 12 months , which comprises of short- and long-term debt. With this increase in debt, the current cash and short-term investment levels stands at ZŁ511.60M , ready to deploy into the business. Moreover, CCC has generated ZŁ78.20M in operating cash flow in the last twelve months, resulting in an operating cash to total debt ratio of 8.53%, indicating that CCC’s current level of operating cash is not high enough to cover debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In CCC’s case, it is able to generate 0.085x cash from its debt capital.
Can CCC pay its short-term liabilities?
Looking at CCC’s most recent ZŁ923.80M liabilities, the company has been able to meet these commitments with a current assets level of ZŁ2.22B, leading to a 2.4x current account ratio. For Luxury companies, this ratio is within a sensible range since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Is CCC’s debt level acceptable?
With a debt-to-equity ratio of 78.50%, CCC can be considered as an above-average leveraged company. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. We can check to see whether CCC is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In CCC’s, case, the ratio of 12.65x suggests that interest is comfortably covered, which means that debtors may be willing to loan the company more money, giving CCC ample headroom to grow its debt facilities.
At its current level of cash flow coverage, CCC has room for improvement to better cushion for events which may require debt repayment. 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 CCC’s financial health. Other important fundamentals need to be considered alongside. You should continue to research CCC to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CCC’s future growth? Take a look at our free research report of analyst consensus for CCC’s outlook.
- Valuation: What is CCC 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 CCC 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.