Yahoo Finance What You Must Know About Compañía de Minas Buenaventura SAA’s (NYSE:BVN) Financial Health
Mid-caps stocks, like Compañía de Minas Buenaventura SAA (NYSE:BVN) with a market capitalization of US$3.14b, aren’t the focus of most investors who prefer to direct their investments towards either large-cap or small-cap stocks. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. This article will examine BVN’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Don’t forget that this is a general and concentrated examination of Compañía de Minas BuenaventuraA’s financial health, so you should conduct further analysis into BVN here.
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How does BVN’s operating cash flow stack up against its debt?
BVN has sustained its debt level by about US$704.0m over the last 12 months made up of current and long term debt. At this current level of debt, BVN currently has US$358.9m remaining in cash and short-term investments , ready to deploy into the business. Moreover, BVN has produced US$392.9m in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 55.8%, indicating that BVN’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 BVN’s case, it is able to generate 0.56x cash from its debt capital.
Does BVN’s liquid assets cover its short-term commitments?
Looking at BVN’s most recent US$341.3m liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.2x. Usually, for Metals and Mining companies, this is a suitable ratio since there’s sufficient cash cushion without leaving too much capital idle or in low-earning investments.
Does BVN face the risk of succumbing to its debt-load?
With a debt-to-equity ratio of 22.4%, BVN’s debt level may be seen as prudent. This range is considered safe as BVN is not taking on too much debt obligation, which may be constraining for future growth. We can check to see whether BVN is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In BVN’s, case, the ratio of 4.94x suggests that interest is appropriately covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.
Next Steps:
BVN’s debt level is appropriate for a company its size, and it is also able to generate sufficient cash flow coverage, meaning it has been able to put its debt in good use. Furthermore, the company exhibits an ability to meet its near term obligations should an adverse event occur. Keep in mind I haven’t considered other factors such as how BVN has been performing in the past. I recommend you continue to research Compañía de Minas BuenaventuraA to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BVN’s future growth? Take a look at our free research report of analyst consensus for BVN’s outlook.
Valuation: What is BVN 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 BVN 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
