Investors looking for stocks with high market liquidity and zero debt on the balance sheet should consider Expeditors International of Washington, Inc. (NASDAQ:EXPD). With a market valuation of US$11b, EXPD is a safe haven in times of market uncertainty due to its strong balance sheet. These firms won’t be left high and dry if liquidity dries up, and they will be relatively unaffected by rises in interest rates. Today I will analyse the latest financial data for EXPD to determine is solvency and liquidity and whether the stock is a sound investment.
Does EXPD face the risk of succumbing to its debt-load?
A debt-to-equity ratio threshold varies depending on what industry the company operates, since some requires more debt financing than others. As a rule of thumb, a financially healthy large-cap should have a ratio less than 40%. For EXPD, the debt-to-equity ratio is zero, meaning that the company has no debt. 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 EXPD, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Does EXPD’s liquid assets cover its short-term commitments?
Given zero long-term debt on its balance sheet, Expeditors International of Washington has no solvency issues, which is 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$1.4b, the company has been able to meet these commitments with a current assets level of US$2.7b, leading to a 1.99x current account ratio. Usually, for Logistics companies, this is a suitable ratio since there’s a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
EXPD has no debt as well as ample cash to cover its short-term commitments. Its strong balance sheet reduces risk for the company and its investors. I admit this is a fairly basic analysis for EXPD’s financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Expeditors International of Washington to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EXPD’s future growth? Take a look at our free research report of analyst consensus for EXPD’s outlook.
- Valuation: What is EXPD 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 EXPD 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.
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 firstname.lastname@example.org.