Yahoo Finance What You Must Know About Kuehne + Nagel International AG’s (VTX:KNIN) Financial Health
Investors looking for stocks with high market liquidity and little debt on the balance sheet should consider Kuehne + Nagel International AG (VTX:KNIN). With a market valuation of CHF18.90b, KNIN is a safe haven in times of market uncertainty due to its strong balance sheet. In times of low liquidity in the market, these firms won’t be left high and dry. They are also relatively unaffected by increases in interest rates. Today I will analyse the latest financial data for KNIN to determine is solvency and liquidity and whether the stock is a sound investment.
View our latest analysis for Kuehne + Nagel International
Does KNIN produce enough cash relative to debt?
KNIN has built up its total debt levels in the last twelve months, from CHF175.00m to CHF419.00m made up of predominantly near term debt. With this rise in debt, KNIN’s cash and short-term investments stands at CHF522.00m , ready to deploy into the business. Moreover, KNIN has generated cash from operations of CHF788.00m in the last twelve months, leading to an operating cash to total debt ratio of 188.07%, indicating that KNIN’s debt is appropriately covered by operating cash. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In KNIN’s case, it is able to generate 1.88x cash from its debt capital.
Can KNIN meet its short-term obligations with the cash in hand?
At the current liabilities level of CHF5.15b liabilities, it appears that the company has been able to meet these obligations given the level of current assets of CHF5.32b, with a current ratio of 1.03x. Usually, for Shipping companies, this is a suitable ratio since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Can KNIN service its debt comfortably?
With debt at 21.12% of equity, KNIN may be thought of as appropriately levered. KNIN is not taking on too much debt commitment, which can be restrictive and risky for equity-holders. We can check to see whether KNIN is able to meet its debt obligations by looking at the net interest coverage ratio. Net interest should be covered by earnings before interest and tax (EBIT) by at least three times to be safe. In KNIN’s case, the ratio of 978x suggests that interest is amply covered. High interest coverage is seen as a responsible and safe practice, which highlights why most investors believe large-caps such as KNIN is a safe investment.
Next Steps:
KNIN has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at an appropriate level. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure KNIN has company-specific issues impacting its capital structure decisions. I recommend you continue to research Kuehne + Nagel International to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for KNIN’s future growth? Take a look at our free research report of analyst consensus for KNIN’s outlook.
Valuation: What is KNIN 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 KNIN 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.
