Yahoo Finance Is Teladoc Inc’s (NYSE:TDOC) Liquidity Good Enough?
Mid-caps stocks, like Teladoc Inc (NYSE:TDOC) with a market capitalization of US$3.85b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. TDOC’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into TDOC here. Check out our latest analysis for Teladoc
Does TDOC produce enough cash relative to debt?
TDOC has built up its total debt levels in the last twelve months, from US$44.42m to US$0 , which comprises of short- and long-term debt. With this increase in debt, TDOC currently has US$122.31m remaining in cash and short-term investments for investing into the business. Moving onto cash from operations, its operating cash flow is not yet significant enough to calculate a meaningful cash-to-debt ratio, indicating that operational efficiency is something we’d need to take a look at. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can examine some of TDOC’s operating efficiency ratios such as ROA here.
Does TDOC’s liquid assets cover its short-term commitments?
Looking at TDOC’s most recent US$40.33m liabilities, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 3.87x. Though, anything above 3x is considered high and could mean that TDOC has too much idle capital in low-earning investments.
Does TDOC face the risk of succumbing to its debt-load?
TDOC’s level of debt is appropriate relative to its total equity, at 38.20%. This range is considered safe as TDOC is not taking on too much debt obligation, which may be constraining for future growth. Risk around debt is very low for TDOC, and the company also has the ability and headroom to increase debt if needed going forward.
Next Steps:
TDOC’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 proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for TDOC’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Teladoc to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for TDOC’s future growth? Take a look at our free research report of analyst consensus for TDOC’s outlook.
Valuation: What is TDOC 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 TDOC 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.
