Yahoo Finance Ekso Bionics Holdings Inc (NASDAQ:EKSO): Time For A Financial Health Check
Investors are always looking for growth in small-cap stocks like Ekso Bionics Holdings Inc (NASDAQ:EKSO), with a market cap of US$100.79m. However, an important fact which most ignore is: how financially healthy is the business? Companies operating in the Medical Equipment industry, in particular ones that run negative earnings, are more likely to be higher risk. Evaluating financial health as part of your investment thesis is vital. I believe these basic checks tell most of the story you need to know. Though, I know these factors are very high-level, so I recommend you dig deeper yourself into EKSO here.
Does EKSO produce enough cash relative to debt?
EKSO’s debt level has been constant at around US$7.06m over the previous year made up of current and long term debt. At this stable level of debt, EKSO’s cash and short-term investments stands at US$27.81m , 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 assess some of EKSO’s operating efficiency ratios such as ROA here.
Does EKSO’s liquid assets cover its short-term commitments?
With current liabilities at US$9.17m, it appears that the company has been able to meet these obligations given the level of current assets of US$34.94m, with a current ratio of 3.81x. Though, anything above 3x is considered high and could mean that EKSO has too much idle capital in low-earning investments.
Can EKSO service its debt comfortably?
With debt reaching 45.18% of equity, EKSO may be thought of as relatively highly levered. This is not unusual for small-caps as debt tends to be a cheaper and faster source of funding for some businesses. Though, since EKSO is currently loss-making, there’s a question of sustainability of its current operations. 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:
EKSO’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise. However, the company exhibits an ability to meet its near term obligations should an adverse event occur. This is only a rough assessment of financial health, and I’m sure EKSO has company-specific issues impacting its capital structure decisions. I recommend you continue to research Ekso Bionics Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for EKSO’s future growth? Take a look at our free research report of analyst consensus for EKSO’s outlook.
Historical Performance: What has EKSO’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 pass 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.
