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Antofagasta plc (LON: ANTO), a large capitalization company worth £ 9.8 billion, comes to mind for investors looking for a solid equity investment and reliable. Most investors prefer these headlines because of their strong balance sheet and high liquidity, which means that the public market is abundant in the market.
These companies are resilient in times of low liquidity and are not as strongly affected by rising interest rates as highly indebted companies.
Using the most recent data for ANTO, I will determine its financial position based on its solvency and liquidity and determine whether the stock represents a safe investment.
Discover our latest badysis for Antofagasta
Does ANTO produce a lot of money in relation to its debt?
During the past year, ANTO has reduced its debt from 2.7 billion USD to 2.5 billion USD.
, which also represents a long-term debt.
With that
the repayment of the debt,
ANTO currently has $ 1.9 billion in cash and short-term investments
, ready to be used to run the business.
In addition to that,
ANTO a
product
Cash flow from operations of 1.3 billion USD
during the same period of time,
resulting in
a cash operating ratio on total debt of 53%,
signaling that
ANTO
the operating cash flow is sufficient to cover its debt.
Can ANTO pay its debts in the short term?
Of which current liabilities amount to US $ 1.3 billion,
it seems that the company
maintained a safe level of current badets to meet its obligations, the latest current ratio being 2.63.
The current ratio is calculated by dividing current badets by current liabilities.
As a general rule, for metallurgical and mining companies, there is a reasonable ratio
since there is a bit of monetary reserve without leaving too much capital in a low-yield environment.
Is ANTO's debt level acceptable?
ANTO's debt level is appropriate in relation to its total equity, at 26%.
This range is considered safe because ANTO does not have too much debt,
which can be binding for future growth.
We can verify whether ANTO's debt levels are sustainable by comparing the interest paid to the profits of a company.
A business that generates a profit after interest and taxes of at least three times its net interest payments is considered financially sound.
For ANTO, the ratio
of 15.97x suggests that the interest is
amply
covered.
Large cap investments such as ANTO are often considered safe investments because of their ability to generate large gains many times more than interest payments.
Next steps:
ANTO's debt level is suitable for a company the size of ANTO. He is also able to generate sufficient cash flow, which means that he has been able to use his debt wisely.
In addition, the company demonstrates its ability to meet its obligations in the short term, which is not a big surprise for a large capitalization.
Keep in mind that I have not taken into account other factors such as the performance of ANTO in the past.
I suggest you
continue to search Antofagasta for a
best picture
from stock watching:
- Future prospects: What do well-informed industry badysts predict for ANTO's future growth? Check out our free research report on badyst consensus regarding ANTO's outlook.
- Evaluation: What is ANTO worth today? Is the stock undervalued even when its growth prospects are embedded in its intrinsic value? The intrinsic value infographic of our free research report allows to visualize if ANTO is currently misjudged by the market.
- Other performing stocks: Are there other stocks offering better prospects with proven track records? Explore our free list of these large stocks here.
Our goal is to provide you with a long-term research badysis based on fundamental data. Note that our badysis may not take into account the latest price sensitive business announcements or qualitative information.
If you notice an error that needs to be corrected, please contact the publisher at [email protected]. This article from Simply Wall St is of a general nature. This is not a recommendation to buy or sell shares, and does not take into account your goals or your financial situation. Simply Wall St has no position on the actions mentioned. Thanks for the reading.
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