Macroaxis Stories

Should I hold on to my MEI Pharma (NASDAQ:MEIP) position?

August 28, 2020  By Rifka Kats
Macroaxis Story
MEI Pharma is scheduled to announce its earnings today. The next earnings report is expected on the 5th of November 2020. MEI Pharma Price to Earnings Ratio are very stable at the moment as compared to the past year. MEI Pharma reported last year Price to Earnings Ratio of 0.00115. As of 28th of August 2020, Price to Sales Ratio is likely to grow to 49.04, while Average Equity is likely to drop about 46.2 M. While some millenniums are indifferent towards healthcare space, it makes sense to recap MEI Pharma as a unique investment alternative.
Published over a year ago
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Reviewed by Raphi Shpitalnik

This firm currently holds 100 K in liabilities with Debt to Equity (D/E) ratio of 0.0, which may suggest the firm is not taking enough advantage from borrowing. The company has a current ratio of 9.11, suggesting that it is liquid enough and is able to pay its financial obligations when due.
MEI Pharma financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of MEI Pharma, including all of MEI Pharma's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of MEI Pharma assets, the company is considered highly leveraged. Understanding the composition and structure of overall MEI Pharma debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding MEI Total Liabilities

MEI Pharma liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. MEI Pharma has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on MEI Pharma balance sheet include debt obligations and money owed to different MEI Pharma vendors, workers, and loan providers. Below is the chart of MEI short long-term liabilities accounts currently reported on its balance sheet.
You can use MEI Pharma financial leverage analysis tool to get a better grip on understanding its financial position

How important is MEI Pharma's Liquidity

MEI Pharma financial leverage refers to using borrowed capital as a funding source to finance MEI Pharma ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. MEI Pharma financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to MEI Pharma's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of MEI Pharma's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between MEI Pharma's total debt and its cash.

MEI Pharma Gross Profit

MEI Pharma Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing MEI Pharma previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show MEI Pharma Gross Profit growth over the last 10 years. Please check MEI Pharma's gross profit and other fundamental indicators for more details.

Breaking down the case for MEI Pharma

MEI Pharma reported the previous year's revenue of 4.54 M. Net Loss for the year was (24.49 M) with profit before overhead, payroll, taxes, and interest of 652 K.

Liabilities Breakdown

17.7 M
Current Liabilities
23.7 M
Long-Term Liabilities
Total Liabilities43.1 Million
Current Liabilities17.74 Million
Long-Term Liabilities23.73 Million

Will MEI Pharma price decline impact its balance sheet?

Recent value at risk is at -8.92. MEI Pharma exhibits very low volatility with skewness of -0.19 and kurtosis of 1.95. However, we advise investors to further study MEI Pharma technical indicators to make sure all market info is available and is reliable.

Our Conclusion on MEI Pharma

Although other companies in the biotechnology industry are either recovering or due for a correction, MEI Pharma may not be performing as strong as the other in terms of long-term growth potentials. To conclude, as of the 28th of August 2020, our analysis shows that MEI Pharma almost neglects market trends. The firm is undervalued and projects close to average odds of financial turmoil for the next 2 years. However, our final 30 days buy-hold-sell recommendation on the firm is Strong Sell.

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Editorial Staff

Rifka Kats is a Member of Macroaxis Editorial Board. Rifka writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce. View Profile
This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of MEI Pharma. Please refer to our Terms of Use for any information regarding our disclosure principles.

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