Is Bio-Rad Laboratories, Inc. (NYSE:BIO) A Financially Strong Company?

Mid-caps stocks, like Bio-Rad Laboratories, Inc. (NYSE:BIO) with a market capitalization of US$8.2b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. However, generally ignored mid-caps have historically delivered better risk-adjusted returns than the two other categories of stocks. Today we will look at BIO’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look further into BIO here.

View our latest analysis for Bio-Rad Laboratories

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

BIO has sustained its debt level by about US$441m over the last 12 months which accounts for long term debt. At this constant level of debt, BIO’s cash and short-term investments stands at US$861m for investing into the business. Additionally, BIO has generated cash from operations of US$250m during the same period of time, resulting in an operating cash to total debt ratio of 57%, indicating that BIO’s debt is appropriately covered by operating cash. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In BIO’s case, it is able to generate 0.57x cash from its debt capital.

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

With current liabilities at US$453m, it appears that the company has been able to meet these commitments with a current assets level of US$2.0b, leading to a 4.49x current account ratio. Having said that, a ratio greater than 3x may be considered by some to be quite high, however this is not necessarily a negative for the company.

Can BIO service its debt comfortably?

With debt at 9.0% of equity, BIO may be thought of as having low leverage. BIO is not taking on too much debt commitment, which may be constraining for future growth.

Next Steps:

BIO’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. 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 BIO has company-specific issues impacting its capital structure decisions. I suggest you continue to research Bio-Rad Laboratories to get a better picture of the stock by looking at:

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at [email protected]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.