Small-caps and large-caps are wildly popular among investors; however, mid-cap stocks, such as Anaplan, Inc. (NYSE:PLAN) with a market-capitalization of US$3.0b, rarely draw their attention. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. PLAN’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into PLAN here.
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How does PLAN’s operating cash flow stack up against its debt?
In the previous 12 months, PLAN’s rose by about US$4.0m . With this ramp up in debt, PLAN currently has US$374m 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. For this article’s sake, I won’t be looking at this today, but you can examine some of PLAN’s operating efficiency ratios such as ROA here.
Does PLAN’s liquid assets cover its short-term commitments?
Looking at PLAN’s US$169m in current liabilities, the company has been able to meet these obligations given the level of current assets of US$459m, with a current ratio of 2.72x. Generally, for Software companies, this is a reasonable ratio as there’s enough of a cash buffer without holding too much capital in low return investments.
Can PLAN service its debt comfortably?
With debt at 1.1% of equity, PLAN may be thought of as having low leverage. This range is considered safe as PLAN is not taking on too much debt obligation, which may be constraining for future growth. Risk around debt is extremely low for PLAN, and the company also has the ability and headroom to increase debt if needed going forward.
PLAN’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. This is only a rough assessment of financial health, and I’m sure PLAN has company-specific issues impacting its capital structure decisions. I recommend you continue to research Anaplan to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PLAN’s future growth? Take a look at our free research report of analyst consensus for PLAN’s outlook.
- Historical Performance: What has PLAN’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.