Yahoo Finance Why Anaplan, Inc. (NYSE:PLAN) Is A Financially Healthy Company
Small-cap and large-cap companies receive a lot of attention from investors, but mid-cap stocks like Anaplan, Inc. (NYSE:PLAN), with a market cap of US$7.3b, 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. This article will examine PLAN’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 PLAN here.
Check out our latest analysis for Anaplan
Does PLAN Produce Much Cash Relative To Its Debt?
Over the past year, PLAN has borrowed debt capital of around US$54m made up of predominantly near term debt. With this ramp up in debt, the current cash and short-term investment levels stands at US$333m , ready to be used for running the business. Moving on, operating cash flow was negative over the last twelve months. 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 PLAN’s operating efficiency ratios such as ROA here.
Can PLAN meet its short-term obligations with the cash in hand?
With current liabilities at US$234m, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.94x. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Software companies, this is a reasonable ratio since there's a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Is PLAN’s debt level acceptable?
PLAN’s level of debt is low relative to its total equity, at 4.7%. This range is considered safe as PLAN is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. Investors' risk associated with debt is virtually non-existent with PLAN, and the company has plenty of headroom and ability to raise debt should it need to in the future.
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PLAN’s low debt is also met with low coverage. This indicates room for improvement as its cash flow covers less than a quarter of its borrowings, which means its operating efficiency could be better. However, the company exhibits proper management of current assets and upcoming liabilities. Keep in mind I haven't considered other factors such as how PLAN has been performing in the past. I recommend you continue to research Anaplan to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PLAN’s future growth? Take a look at our free research report of analyst consensus for PLAN’s outlook.
Valuation: What is PLAN 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 PLAN 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.
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