Are Orion Minerals Limited’s (ASX:ORN) Interest Costs Too High?

Does ORN face the risk of succumbing to its debt-load?

ORN is a relatively highly levered company with a debt-to-equity of 90.20%. This is not unusual for small-caps as debt tends to be a cheaper and faster source of funding for some businesses. However, since ORN is currently loss-making, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.

Next Steps:

ORN’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. However, 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 ORN has been performing in the past. I recommend you continue to research Orion Minerals to get a better picture of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

1. Historical Performance: What has ORN’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of ORN’s historicals for more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a 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.