Yahoo Finance Is Playtech plc’s (LON:PTEC) Liquidity Good Enough?
Small and large cap stocks are widely popular for a variety of reasons, however, mid-cap companies such as Playtech plc (LON:PTEC), with a market cap of UK£2.41b, often get neglected by retail investors. 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 PTEC’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Don’t forget that this is a general and concentrated examination of Playtech’s financial health, so you should conduct further analysis into PTEC here. View out our latest analysis for Playtech
How much cash does PTEC generate through its operations?
PTEC has sustained its debt level by about UK£476.64m over the last 12 months made up of current and long term debt. At this current level of debt, PTEC currently has UK£583.96m remaining in cash and short-term investments , ready to deploy into the business. Moreover, PTEC has produced UK£306.65m in operating cash flow in the last twelve months, resulting in an operating cash to total debt ratio of 64.34%, indicating that PTEC’s current level of operating cash is high enough to cover debt. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In PTEC’s case, it is able to generate 0.64x cash from its debt capital.
Can PTEC pay its short-term liabilities?
At the current liabilities level of UK£547.86m liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.43x. Usually, for Hospitality companies, this is a suitable ratio as there’s enough of a cash buffer without holding too capital in low return investments.
Is PTEC’s debt level acceptable?
With a debt-to-equity ratio of 35.09%, PTEC’s debt level may be seen as prudent. PTEC is not taking on too much debt commitment, which can be restrictive and risky for equity-holders.
Next Steps:
PTEC has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at an appropriate level. Furthermore, the company exhibits proper management of current assets and upcoming liabilities. This is only a rough assessment of financial health, and I’m sure PTEC has company-specific issues impacting its capital structure decisions. I suggest you continue to research Playtech to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PTEC’s future growth? Take a look at our free research report of analyst consensus for PTEC’s outlook.
Valuation: What is PTEC 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 PTEC 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 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.
