Small-caps and large-caps are wildly popular among investors, however, mid-cap stocks, such as GW Pharmaceuticals plc (NASDAQ:GWPH), with a market capitalization of US$4.51B, rarely draw their attention from the investing community. 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 GWPH’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into GWPH here. See our latest analysis for GW Pharmaceuticals
Does GWPH generate an acceptable amount of cash through operations?
GWPH’s debt levels have fallen from UK£14.36M to UK£13.31M over the last 12 months , which is made up of current and long term debt. With this debt payback, GWPH currently has UK£241.18M remaining in cash and short-term investments for investing 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. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of GWPH’s operating efficiency ratios such as ROA here.
Can GWPH meet its short-term obligations with the cash in hand?
At the current liabilities level of UK£36.47M liabilities, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 7.59x. However, anything about 3x may be excessive, since GWPH may be leaving too much capital in low-earning investments.
Does GWPH face the risk of succumbing to its debt-load?
GWPH’s level of debt is low relative to its total equity, at 3.26%. This range is considered safe as GWPH is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. Risk around debt is extremely low for GWPH, and the company also has the ability and headroom to increase debt if needed going forward.
Although GWPH’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. However, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for GWPH’s financial health. Other important fundamentals need to be considered alongside. You should continue to research GW Pharmaceuticals to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GWPH’s future growth? Take a look at our free research report of analyst consensus for GWPH’s outlook.
- Valuation: What is GWPH 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 GWPH 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.