Coeur Mining Inc (NYSE:CDE): Time For A Financial Health Check

Coeur Mining Inc (NYSE:CDE) is a small-cap stock with a market capitalization of US$1.49B. 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 CDE is not presently profitable, it’s crucial to evaluate the current state of its operations and pathway to profitability. Here are few basic financial health checks you should consider before taking the plunge. However, given that I have not delve into the company-specifics, I suggest you dig deeper yourself into CDE here.

How does CDE’s operating cash flow stack up against its debt?

CDE's debt levels have fallen from US$490.41M to US$210.90M over the last 12 months , which is made up of current and long term debt. With this debt payback, CDE's cash and short-term investments stands at US$162.18M for investing into the business. Moreover, CDE has produced US$125.82M in operating cash flow in the last twelve months, resulting in an operating cash to total debt ratio of 59.66%, signalling that CDE’s debt is appropriately covered by operating cash. This ratio can also be interpreted as a measure of efficiency for unprofitable businesses as traditional metrics such as return on asset (ROA) requires positive earnings. In CDE’s case, it is able to generate 0.6x cash from its debt capital.

Can CDE meet its short-term obligations with the cash in hand?

At the current liabilities level of US$116.63M liabilities, it appears that the company has been able to meet these commitments with a current assets level of US$410.79M, leading to a 3.52x current account ratio. However, anything about 3x may be excessive, since CDE may be leaving too much capital in low-earning investments.

Can CDE service its debt comfortably?

CDE’s level of debt is appropriate relative to its total equity, at 37.79%. This range is considered safe as CDE is not taking on too much debt obligation, which may be constraining for future growth. Investors' risk associated with debt is very low with CDE, and the company has plenty of headroom and ability to raise debt should it need to in the future.

Next Steps:

CDE’s debt level is appropriate for a company its size, and it is also able to generate sufficient cash flow coverage, meaning it has been able to put its debt in good use. Furthermore, the company will be able to pay all of its upcoming liabilities from its current short-term assets. This is only a rough assessment of financial health, and I'm sure CDE has company-specific issues impacting its capital structure decisions. You should continue to research Coeur Mining to get a more holistic view of the stock by looking at:

• 1. Future Outlook: What are well-informed industry analysts predicting for CDE’s future growth? Take a look at our free research report of analyst consensus for CDE’s outlook.
• 2. Valuation: What is CDE 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 CDE is currently mispriced by the market.
• 3. 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.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.