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What You Must Know About Verint Systems Inc’s (NASDAQ:VRNT) Financial Strength

Small-cap and large-cap companies receive a lot of attention from investors, but mid-cap stocks like Verint Systems Inc (NASDAQ:VRNT), with a market cap of US$2.74B, are often out of the spotlight. Despite this, commonly overlooked mid-caps have historically produced better risk-adjusted returns than their small and large-cap counterparts. Let’s take a look at VRNT’s debt concentration and assess their financial liquidity to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into VRNT here. Check out our latest analysis for Verint Systems

How does VRNT’s operating cash flow stack up against its debt?

VRNT’s debt level has been constant at around US$776.30M over the previous year comprising of short- and long-term debt. At this current level of debt, VRNT’s cash and short-term investments stands at US$345.84M , ready to deploy into the business. Moreover, VRNT has generated cash from operations of US$176.33M over the same time period, leading to an operating cash to total debt ratio of 22.71%, meaning that VRNT’s current level of operating cash is high enough to cover debt. This ratio can also be a sign of operational efficiency for unprofitable companies as traditional metrics such as return on asset (ROA) requires positive earnings. In VRNT’s case, it is able to generate 0.23x cash from its debt capital.

Can VRNT meet its short-term obligations with the cash in hand?

With current liabilities at US$505.51M, the company has been able to meet these commitments with a current assets level of US$782.19M, leading to a 1.55x current account ratio. Generally, for Software companies, this is a reasonable ratio as there’s enough of a cash buffer without holding too capital in low return investments.

NasdaqGS:VRNT Historical Debt Jun 5th 18
NasdaqGS:VRNT Historical Debt Jun 5th 18

Is VRNT’s debt level acceptable?

With debt reaching 68.56% of equity, VRNT may be thought of as relatively highly levered. This is not uncommon for a mid-cap company given that debt tends to be lower-cost and at times, more accessible. However, since VRNT is currently loss-making, there’s a question of sustainability of its current operations. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.

Next Steps:

VRNT’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. However, the company exhibits proper management of current assets and upcoming liabilities. Keep in mind I haven’t considered other factors such as how VRNT has been performing in the past. You should continue to research Verint Systems to get a better picture of the stock by looking at:

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  1. Future Outlook: What are well-informed industry analysts predicting for VRNT’s future growth? Take a look at our free research report of analyst consensus for VRNT’s outlook.

  2. Valuation: What is VRNT 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 VRNT is currently mispriced by the market.

  3. 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.