Stock Analysis

Sangamo Therapeutics Inc (NASDAQ:SGMO): Financial Strength Analysis

NasdaqCM:SGMO
Source: Shutterstock

Mid-caps stocks, like Sangamo Therapeutics Inc (NASDAQ:SGMO) with a market capitalization of US$2.11B, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. However, generally ignored mid-caps have historically delivered better risk adjusted returns than both of those groups. Today we will look at SGMO’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into SGMO here. Check out our latest analysis for Sangamo Therapeutics

Advertisement

Can SGMO service its debt comfortably?

Debt-to-equity ratio standards differ between industries, as some are more capital-intensive than others, meaning they need more capital to carry out core operations. As a rule of thumb, a financially healthy mid-cap should have a ratio less than 40%. For Sangamo Therapeutics, investors should not worry about its debt levels because the company has none! It has been operating its business with zero debt and utilising only its equity capital. Investors' risk associated with debt is virtually non-existent with SGMO, and the company has plenty of headroom and ability to raise debt should it need to in the future.

NasdaqGS:SGMO Historical Debt Feb 25th 18
NasdaqGS:SGMO Historical Debt Feb 25th 18

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

Since Sangamo Therapeutics doesn’t have any debt on its balance sheet, it doesn’t have any solvency issues, which is a term used to describe the company’s ability to meet its long-term obligations. However, another measure of financial health is its short-term obligations, which is known as liquidity. These include payments to suppliers, employees and other stakeholders. With current liabilities at US$0, it seems that the business is not able to meet these obligations given the level of current assets of US$0, with a current ratio of 0x below the prudent level of 3x.

Next Steps:

SGMO has no debt as well as ample cash to cover its near-term commitments. Its safe operations reduces risk for the company and shareholders, though, some degree of debt may also ramp up earnings growth and operational efficiency. Keep in mind I haven't considered other factors such as how SGMO has performed in the past. I recommend you continue to research Sangamo Therapeutics to get a more holistic view of the stock by looking at:

New: Manage All Your Stock Portfolios in One Place

We've created the ultimate portfolio companion for stock investors, and it's free.

• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks

Try a Demo Portfolio for Free

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.

About NasdaqCM:SGMO

Sangamo Therapeutics

A clinical-stage genomic medicine company, focuses on translating science into medicines that transform the lives of patients and families afflicted with serious diseases in the United States.

Undervalued with excellent balance sheet.

Advertisement