KeepHealthCare.ORG – How Financially Strong Is Perma-Fix Environmental Services Inc (NASDAQ:PESI)? – Simply Wall St News
Investors are always looking for growth in small-cap stocks like Perma-Fix Environmental Services Inc (NASDAQ:PESI), with a market cap of US$51.20m. However, an important fact which most ignore is: how financially healthy is the business?
Since PESI is loss-making right now,
the current state of its operations and pathway to profitability.
Here are few basic financial health checks you should consider before taking the plunge.
this commentary is still very high-level, so
I suggest you
dig deeper yourself into PESI here.
How much cash does PESI generate through its operations?
Over the past year, PESI has reduced its debt from US$6.98m to US$3.55m
– this includes both the current and long-term debt.
PESI’s cash and short-term investments stands at US$2.92m
, ready to deploy into the business.
cash from operations of US$1.00m
during the same period of time,
an operating cash to total debt ratio of 28.27%,
current level of operating cash is high enough to cover debt.
This ratio can also be interpreted as a measure of efficiency
as traditional metrics
such as return on asset (ROA) requires
In PESI’s case, it is able to generate 0.28x cash from its debt capital.
Can PESI meet its short-term obligations with the cash in hand?
Looking at PESI’s most recent US$18.44m liabilities,
it appears that the company
is not able to meet these obligations given the level of current assets of US$15.97m, with a current ratio of 0.87x below the prudent level of 3x.
NasdaqCM:PESI Historical Debt July 12th 18
Does PESI face the risk of succumbing to its debt-load?
With debt at 12.54% of equity, PESI may be thought of as appropriately levered.
PESI is not taking on too much debt commitment,
which may be constraining for future growth.
Risk around debt is very low for PESI, and the company also has the ability and headroom to increase debt if needed going forward.
PESI has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at a safe level.
But, as shareholders, you should try and determine whether this level of debt is justified for PESI,
especially when liquidity may also be an issue.
This is only a rough assessment of financial health, and I’m sure PESI has company-specific issues impacting its capital structure decisions.
I recommend you
continue to research Perma-Fix Environmental Services to get a
of the stock by looking at:
Valuation: What is PESI 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 PESI is currently mispriced by the market.
Historical Performance: What has PESI’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.
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