Yahoo Finance All You Need To Know About Magnolia Oil & Gas Corporation’s (NYSE:MGY) Financial Health
Small-caps and large-caps are wildly popular among investors, however, mid-cap stocks, such as Magnolia Oil & Gas Corporation (NYSE:MGY), with a market capitalization of US$2.9b, rarely draw their attention from the investing community. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. Let’s take a look at MGY’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into MGY here.
See our latest analysis for Magnolia Oil & Gas
How much cash does MGY generate through its operations?
In the previous 12 months, MGY’s rose by about US$1m . With this increase in debt, MGY currently has US$242k remaining in cash and short-term investments , ready to deploy into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can assess some of MGY’s operating efficiency ratios such as ROA here.
Can MGY pay its short-term liabilities?
With current liabilities at US$12m, the company arguably has a rather low level of current assets relative its obligations, with the current ratio last standing at 0.031x.
Can MGY service its debt comfortably?
With debt at 20% of equity, MGY may be thought of as appropriately levered. This range is considered safe as MGY is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. MGY’s risk around capital structure is low, and the company has the headroom and ability to raise debt should it need to in the future.
Next Steps:
MGY’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. Furthermore, its lack of liquidity raises questions over current asset management practices for the mid-cap. I admit this is a fairly basic analysis for MGY’s financial health. Other important fundamentals need to be considered alongside. You should continue to research Magnolia Oil & Gas to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MGY’s future growth? Take a look at our free research report of analyst consensus for MGY’s outlook.
Valuation: What is MGY 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 MGY 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.
