Yahoo Finance Why SINA Corporation (NASDAQ:SINA) Is A Financially Healthy Company
Small-caps and large-caps are wildly popular among investors, however, mid-cap stocks, such as SINA Corporation (NASDAQ:SINA), with a market capitalization of US$5.03b, rarely draw their attention from the investing community. Surprisingly though, when accounted for risk, mid-caps have delivered better returns compared to the two other categories of stocks. This article will examine SINA’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into SINA here.
Check out our latest analysis for SINA
Does SINA produce enough cash relative to debt?
SINA has built up its total debt levels in the last twelve months, from US$160.5m to US$1.12b – this includes both the current and long-term debt. With this growth in debt, the current cash and short-term investment levels stands at US$2.70b , ready to deploy 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. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of SINA’s operating efficiency ratios such as ROA here.
Can SINA meet its short-term obligations with the cash in hand?
At the current liabilities level of US$1.22b liabilities, it seems that the business has been able to meet these commitments with a current assets level of US$3.69b, leading to a 3.02x current account ratio. However, anything about 3x may be excessive, since SINA may be leaving too much capital in low-earning investments.
Does SINA face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 31.1%, SINA’s debt level may be seen as prudent. SINA is not taking on too much debt commitment, which can be restrictive and risky for equity-holders.
Next Steps:
Although SINA’s debt level is relatively low, its cash flow levels still could not copiously cover its borrowings. This may indicate room for improvement in terms of its operating efficiency. However, the company will be able to pay all of its upcoming liabilities from its current short-term assets. I admit this is a fairly basic analysis for SINA’s financial health. Other important fundamentals need to be considered alongside. You should continue to research SINA to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SINA’s future growth? Take a look at our free research report of analyst consensus for SINA’s outlook.
Valuation: What is SINA 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 SINA 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.
