Yahoo Finance Does Fang Holdings Limited’s (NYSE:SFUN) Debt Level Pose A Problem?
Small-cap and large-cap companies receive a lot of attention from investors, but mid-cap stocks like Fang Holdings Limited (NYSE:SFUN), with a market cap of US$2.01B, are often out of the spotlight. However, history shows that overlooked mid-cap companies have performed better on a risk-adjusted manner than the smaller and larger segment of the market. SFUN’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. Don’t forget that this is a general and concentrated examination of Amazon’s financial health, so you should conduct further analysis into SFUN here. View our latest analysis for Fang Holdings
Does SFUN generate an acceptable amount of cash through operations?
SFUN’s debt levels surged from US$573.19M to US$648.16M over the last 12 months , which comprises of short- and long-term debt. With this growth in debt, the current cash and short-term investment levels stands at US$284.08M , ready to deploy into the business. Additionally, SFUN has generated US$126.89M in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 19.58%, meaning that SFUN’s operating cash is not sufficient to cover its debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In SFUN’s case, it is able to generate 0.2x cash from its debt capital.
Can SFUN pay its short-term liabilities?
With current liabilities at US$581.81M, the company has been able to meet these commitments with a current assets level of US$748.41M, leading to a 1.29x current account ratio. Usually, for Internet companies, this is a suitable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
Is SFUN’s debt level acceptable?
SFUN is a relatively highly levered company with a debt-to-equity of 87.56%. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses.
Next Steps:
SFUN’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. Though, the company will be able to pay all of its upcoming liabilities from its current short-term assets. This is only a rough assessment of financial health, and I’m sure SFUN has company-specific issues impacting its capital structure decisions. You should continue to research Fang Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SFUN’s future growth? Take a look at our free research report of analyst consensus for SFUN’s outlook.
Valuation: What is SFUN 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 SFUN 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 pass 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.
