Stocks with market capitalization between $2B and $10B, such as Schneider National Inc (NYSE:SNDR) with a size of US$4.86B, do not attract as much attention from the investing community as do the small-caps and large-caps. Despite this, the two other categories have lagged behind the risk-adjusted returns of commonly ignored mid-cap stocks. Let’s take a look at SNDR’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 SNDR here. View our latest analysis for Schneider National

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

SNDR has shrunken its total debt levels in the last twelve months, from US$698.30M to US$439.70M , which is made up of current and long term debt. With this debt payback, the current cash and short-term investment levels stands at US$280.10M , ready to deploy into the business. Moreover, SNDR has generated cash from operations of US$461.30M over the same time period, leading to an operating cash to total debt ratio of 104.91%, meaning that SNDR’s operating cash is sufficient to cover its debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In SNDR’s case, it is able to generate 1.05x cash from its debt capital.

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

At the current liabilities level of US$462.00M 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 2.37x. Usually, for Transportation companies, this is a suitable ratio as there’s enough of a cash buffer without holding too capital in low return investments.

Can SNDR service its debt comfortably?

With debt at 23.26% of equity, SNDR may be thought of as appropriately levered. SNDR is not taking on too much debt commitment, which may be constraining for future growth. We can test if SNDR’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For SNDR, the ratio of 15.41x suggests that interest is comfortably 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:

SNDR has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at an appropriate level. In addition to this, the company will be able to pay all of its upcoming liabilities from its current short-term assets. Keep in mind I haven’t considered other factors such as how SNDR has been performing in the past. You should continue to research Schneider National to get a better picture of the stock by looking at: