Yahoo Finance Is Tableau Software Inc (NYSE:DATA) A Financially Strong Company?
Small-caps and large-caps are wildly popular among investors; however, mid-cap stocks, such as Tableau Software Inc (NYSE:DATA) with a market-capitalization of US$8.4b, rarely draw their attention. Despite this, commonly overlooked mid-caps have historically produced better risk-adjusted returns than their small and large-cap counterparts. DATA’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 Tableau Software’s financial health, so you should conduct further analysis into DATA here.
Check out our latest analysis for Tableau Software
Can DATA service its debt comfortably?
What is considered a high debt-to-equity ratio differs depending on the industry, because some industries tend to utilize more debt financing than others. Generally, mid-cap stocks are considered financially healthy if its ratio is below 40%. The good news for investors is that Tableau Software has no debt. This means it has been running its business utilising funding from only its equity capital, which is rather impressive. Investors’ risk associated with debt is virtually non-existent with DATA, and the company has plenty of headroom and ability to raise debt should it need to in the future.
Can DATA meet its short-term obligations with the cash in hand?
Given zero long-term debt on its balance sheet, Tableau Software has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. But another important aspect of financial health is liquidity: the company’s ability to meet short-term obligations, including payments to suppliers and employees. At the current liabilities level of US$456m liabilities, it appears that the company has been able to meet these obligations given the level of current assets of US$1.2b, with a current ratio of 2.63x. Usually, for Software 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.
Next Steps:
DATA has zero-debt as well as ample cash to cover its near-term commitments. Its safe operations reduces risk for the company and shareholders, however, some degree of debt may also boost earnings growth and operational efficiency. This is only a rough assessment of financial health, and I’m sure DATA has company-specific issues impacting its capital structure decisions. You should continue to research Tableau Software to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for DATA’s future growth? Take a look at our free research report of analyst consensus for DATA’s outlook.
Valuation: What is DATA 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 DATA 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 editorial-team@simplywallst.com.
