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Small and large cap stocks are widely popular for a variety of reasons, however, mid-cap companies such as uniQure N.V. (NASDAQ:QURE), with a market cap of US$2.2b, 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 QURE’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 commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into QURE here.
QURE’s Debt (And Cash Flows)
Over the past year, QURE has ramped up its debt from US$21m to US$63m , which includes long-term debt. With this rise in debt, QURE’s cash and short-term investments stands at US$209m to keep the business going. Moving on, operating cash flow was negative over the last twelve months. For this article’s sake, I won’t be looking at this today, but you can assess some of QURE’s operating efficiency ratios such as ROA here.
Does QURE’s liquid assets cover its short-term commitments?
At the current liabilities level of US$22m, the company has been able to meet these commitments with a current assets level of US$213m, leading to a 9.51x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. Having said that, many consider a ratio above 3x to be high.
Does QURE face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 40%, QURE’s debt level may be seen as prudent. QURE is not taking on too much debt commitment, which may be constraining for future growth. Investors’ risk associated with debt is very low with QURE, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Although QURE’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. Keep in mind I haven’t considered other factors such as how QURE has been performing in the past. I recommend you continue to research uniQure to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for QURE’s future growth? Take a look at our free research report of analyst consensus for QURE’s outlook.
- Valuation: What is QURE 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 QURE 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.