Yahoo Finance Is Bristow Group Inc’s (NYSE:BRS) Balance Sheet Strong Enough To Weather A Storm?
While small-cap stocks, such as Bristow Group Inc (NYSE:BRS) with its market cap of US$380m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Energy Services companies, in particular ones that run negative earnings, are more likely to be higher risk. Assessing first and foremost the financial health is essential. Here are few basic financial health checks you should consider before taking the plunge. Though, I know these factors are very high-level, so I recommend you dig deeper yourself into BRS here.
How does BRS’s operating cash flow stack up against its debt?
BRS has built up its total debt levels in the last twelve months, from US$1.3b to US$1.5b , which is made up of current and long term debt. With this increase in debt, BRS’s cash and short-term investments stands at US$317m , ready to deploy into the business. Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn’t be too useful, though these low levels of cash means that operational efficiency is worth a look. For this article’s sake, I won’t be looking at this today, but you can examine some of BRS’s operating efficiency ratios such as ROA here.
Can BRS meet its short-term obligations with the cash in hand?
Looking at BRS’s most recent US$335m liabilities, the company has been able to meet these obligations given the level of current assets of US$775m, with a current ratio of 2.32x. Generally, for Energy Services companies, this is a reasonable ratio as there’s enough of a cash buffer without holding too much capital in low return investments.
Can BRS service its debt comfortably?
BRS is a highly-leveraged company with debt exceeding equity by over 100%. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. However, since BRS is presently loss-making, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
Next Steps:
BRS’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. Though, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure BRS has company-specific issues impacting its capital structure decisions. I suggest you continue to research Bristow Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BRS’s future growth? Take a look at our free research report of analyst consensus for BRS’s outlook.
Historical Performance: What has BRS’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.
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.
