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Financial Stress Test Analysis

NXTanalytic completes a financial analysis of each company using data taken from the most recently audited financial statements. Our goal is to provide a snapshot of a company’s financial condition and ability to survive a prolonged period of reduced growth, and/or finance growth or restructuring to take advantage of new opportunities.

Financial Ratios

FL

Financial
Leverage

DC

Debt to
Capital

DA

Debt to
Assets

DE

Debt to
Equity

Key Stress Test Scores​

FCF

Free Cash
Flow

IC

Interest
Coverage

Recent Stress Tests

NameExchangeTickerFCFICFLDCDADE
Dominos PizzaNYSEDPZD-B2,580,090,040,1
Open TextNasdaqOTEXA+A++2,580,090,040,1
JD.com, Inc.NasdaqJDC+A++2,580,090,040,1
Lululemon Athletica Inc.NasdaqLULUC-A++1,680,270,230,38
Papa John's International, Inc.NasdaqPZZAD-C-12,231,190,52-6,31
TJX Companies Inc.NYSETJXD-A++4,060,270,090,38
Honeywell International Inc.NYSEHONB+A3,140,460,860,27
ChipotleNYSECMGD-A++3,030,620,541,64
Trivago N.V.NasdaqTRVGA+A++1,240,10,090,11
Goeasy LtdTSEGSYA++B3,970,740,72,79

All Stress Tests

NameExchangeTickerFCFICFLDCDADE
Dominos PizzaNYSEDPZD-B2.580.090.040.1
Open TextNasdaqOTEXA+A++2.580.090.040.1
Activision Blizzard, IncNasdaqATVI32753072.8961.811.550.3110.2920.493
BJ's Restaurants, Inc.NasdaqBJRI2.8010.653.6930.330.1330.493
The Cheesecake Factory IncorporatedNasdaqCAKE4.1641.494.9380.3370.1020.507
Chuy's Holdings, Inc.NasdaqCHUY-28.162.288---
Gilead Sciences, Inc.NasdaqGILD11770551.544.312.7210.5280.4111.118
Intel CorporationNasdaqINTC-45.530.493---
JD.com, Inc.NasdaqJDC+A++2.580.090.040.1
lululemon athletica inc.NasdaqLULUC-A++1.680.270.230.38
Marriott InternationalNasdaqMAR-4.5735.634000
Mondelez International, Inc.NasdaqMDLZ-64.052.367000
Moderna, Inc.NasdaqMRNA--14.161.353000
Microsoft CorporationNasdaqMSFT-15.992.8000
Micron Technology, Inc.NasdaqMU-57.63
Open Text CorporationNasdaqOTEX11323852.3211.362.0430.4540.4070.832
Dave & Buster's Entertainment, Inc.NasdaqPLAY1.927.0713.9710.7890.2673.729
PayPal Holdings, Inc.NasdaqPYPL32.36-23.643.0320.3070.1460.442
Papa John's International, Inc.NasdaqPZZAD-C-12.231.190.52-6.31
QUALCOMM IncorporatedNasdaqQCOM12.4212.236.7140.7640.4813.232
Roku, Inc.NasdaqROKU159.45-7.192.1050.3720.2810.592
Ross Stores, Inc.NasdaqROST13.3131.051.8370.1610.1040.192
Starbucks CorporationNasdaqSBUX13875.17-12.32-3.084-0.7580.14-0.431
Splunk Inc.NasdaqSPLK-29.25-0.37-11.961.2020.498-5.961
Carrols Restaurant Group, Inc.NasdaqTAST3.27-0.315.660.5950.261.472
T-Mobile USNasdaqTMUS6367784.02-5.043.0190.4640.2870.866
The Trade Desk, Inc.NasdaqTTD146510.27-23.782.8220.0180.0060.018
Texas Instruments IncorporatedNasdaqTXN18552223.9533.662.0230.3940.3220.394
Texas Roadhouse, Inc.NasdaqTXRH-140.042.13---
United Airlines Holdings, Inc.NasdaqUAL551099.89-5.8845.6260.5620.0281.285
Wendy's Company (The)NasdaqWEN19.352263.799.6730.8140.4524.372
International Business Machines CorporationNYSEIBM13.118.47.2520.750.413.00
Johnson & JohnsonNYSEJNJ20.354.52.6520.320.180.47
JP Morgan Chase & Co.NYSEJPM-2.710.2830.560.121.27
Kimberly-Clark Corp.NYSEKMB316.6011.578.7780.980.5139.93
Kinder Morgan, Inc.NYSEKMI27.972.72.1260.500.460.99
The Coca Cola Co.NYSEKO27.9910.74.090.670.502.03
Kroger Co.NYSEKR26.273.75.280.620.311.64
L3Harris Technologies Inc.NYSELHX60.467.91.690.230.180.31
Schlumberger N.V.NYSESLB10.6816.12.330.390.270.63
SNAPNYSESNAP1.1644.11.780.280.220.39
Square, Inc.NYSESQ-0.274.72.650.350.210.55
Constellation Brands, Inc. NYSESTZ32.844.92.280.500.441.00
Stryker CorporationNYSESYZ49.158.92.360.460.370.87
AT&T Inc.NYSET13.632.62.730.450.300.81
Teladoc Health, Inc. NYSETDOC-2.75-2.81.580.300.270.43
Target CorporationNYSETGT16.659.83.620.490.270.97
TJX Companies Inc.NYSETJXD-A++4.060.270.090.38
FleetCor Technologies, Inc.NYSEFLT2.598.23.190.511.060.33
General ElectricNYSEGE38.061.38.910.763.150.35
General Motors CompanyNYSEGM16.678.55.460.712.500.46
Barrick Gold CorpNYSEGOLD54.6415.72.070.210.260.12
Honeywell International Inc.NYSEHONB+A3.140.460.860.27
Global Payments IncNYSEGPN7.52.61.590.250.340.22
Goldman Sachs Group IncNYSEGS4154593.61.611.000.835.020.46
Home Depot IncNYSEHD22811381.313.2-16.441.09-12.000.73
Hilton Worldwide HoldingsNYSEHLT15371419.24.0-31.691.05-19.410.61
Air Products & Chemicals, Inc. NYSEAPD10370090.215.61.660.340.510.30
American Express CompanyNYSEAXP6182210.03.48.600.887.600.88
Boeing CoNYSEBA-154136797.731.9-2.430.000.000.00
Alibaba Group Holding LtdNYSEBABA17364853.111.01.590.000.000.00
Bank of America CorpNYSEBAC4807747.71.31.850.430.750.41
Bristol-Myers Squibb CoNYSEBMY11691600.16.32.510.601.510.60
Berkshire Hathaway Inc. Class BNYSEBRK.B7925101.399.71.910.260.180.34
Chubb LtdNYSECB6080142.56.03.200.020.010.02
Arcos Dorados Holdings Inc.NYSEARCO2.63.16.070.600.241.48
Biglari Holdings Inc.NYSEBH3.13.41.850.300.230.43
Royal Carribean Cruises Ltd.NYSERCL2.55.62.490.430.300.74
Raytheon CompanyNYSERTN1.426.52.830.210.090.27
The Charles Schwab CorporationNYSESCHW4768.8-1.113.520.250.030.34
Taiwan Semiconductor Manufacturing Company LimitedNYSETSM38152288.3100.51.400.050.030.05
Twitter, Inc. NYSETWTR12509.8-2.71.460.230.200.29
Uber Technologies, Inc. NYSEUBER-22455280.78.53.530.620.461.61
Union Pacific CorporationNYSEUNP9230304.78.13.400.590.421.42
United Parcel Service, Inc. NYSEUPS5455299.111.917.620.870.386.65
Raytheon Technologies CorporationNYSEUTX4756178.35.62.830.210.090.27
Linde PLCNYSELIN10403.077.21.760.200.140.25
Eli Lilly and CompanyNYSELLY24348.914.414.560.850.395.67
Lowe'sNYSELOW3.38.920.020.900.448.81
McDonald'sNYSEMCD-48.38.10.610.381.000.61
McKesson CorporationNYSEMCK55.83.40.150.131.000.15
MedtronicNYSEMDT16380.64.32.270.380.270.62
MGM Resorts InternationalNYSEMGM27.7-4.61.000.250.330.33
3M CoNYSEMMM19.317.24.440.670.452.02
Altria Group IncNYSEMO3.47.87.800.820.574.44
Merck & Co., Inc.NYSEMRK21.313.83.260.500.311.02
Newmont CorporationNYSENEM37.311.31.870.220.150.29
Nike IncNYSENKE29.781.12.620.280.150.38
Norfolk SouthernNYSENSC30.26.60.140.455.860.80
OracleNYSEORCL15.96.5188.080.990.5297.17
Occidental PetroleumNYSEOXY48.00.63.190.530.351.13
PfizerNYSEPFE23.310.42.650.370.220.59
Proctor and GambleNYSEPG25.210.82.420.260.140.35
PrologisNYSEPLD-20.47.71.770.340.300.53
Phillip MorrisNYSEPM15.018.5-4.471.450.72-3.20
Public StorageNYSEPSA3.02.61.250.170.170.21
Phillips 66NYSEPSX49.430.72.360.320.200.47
Yum BrandsNYSEYUM31.64.3-0.525.342.36-1.23
Brinker InternationalNYSEEAT45.23.7-1.622.770.97-1.56
ChipotleNYSECMGD-A++3.030.620.541.64
Darden RestuarantNYSEDRI11.8016.62.460.280.160.39
Caterpillar Inc.NYSECAT14.8919.75.360.690.412.22
Carnival Corporation & PlcNYSECCA180.9415.91.780.360.310.55
Cigna CorpNYSECI3.585.23.440.450.240.82
Colgate-Palmolive CompanyNYSECL2.5824.526.940.930.5214.06
The Clorox CompanyNYSECLX33163.738.59.150.830.524.80
ConocoPhillipsNYSECOP10772509.1013.22.010.300.210.42
Salesforce.com, Inc. NYSECRM-0.402.31.630.070.050.08
Trivago N.V.NasdaqTRVGA+A++1.240.10.090.11
Goeasy LtdTSEGSYA++B3.970.740.72.79
Citrix Systems, IncNasdaqCTXSBA++5.240.470.170.89
Uni FirstNYSEUNFD-A++1.250.040.040.04
Jack in The Box Inc.NasdaqJACKBA-1.32.371.33-1.73
Fiesta Restaurant Group, Inc.NasdaqFRGIAF3.590.330.140.49
Red Robin Gourmet Burgers, IncNasdaqRRGBD-F3.430.360.170.57
Newell Brands Inc.NasdaqNWLA++F3.130.530.371.15
Roku Inc.NasdaqROKUFA++2.110.120.070.14
Ruth’s Hospitality Group, IncNasdaqRUTHA+A++5.280.40.130.68

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Stress Tests and Ratios

➤ Interest Coverage Ratio = EBIT / Interest Expense: A powerful measurement of the ‘survivability’ of a corporation. It reflects the ability of a company to pay interest on the outstanding debt and is thus an important assessment of short-term solvency. If the ratio is underneath 1.0 X, this means that the company cannot currently cover interest charges on its debt from current operational income. This could mean that the company is funding itself through the sale of assets or further financing; which are unsustainable. The higher the ratio, the higher probability to survive in the future financial hardship.

➤ EV/FCF Ratio = Enterprise Value / Free Cash Flow: Based on our debt servicing thesis we primarily value companies based on their cash flows. We rely on the EV/FCF ratio to assess the total valuation of the company in relation to its ability to generate cash flows. Enterprise Value is the value of the entire company, both its debt and traded equity. When this is divided by its Free Cash Flow we see how much we are paying to buy that cash flow. The lower the ratio the cheaper it is to “buy” the cash flows of the company.

Leverage Ratios as a Focus of Screening

Debt ratios are classic balance sheet health measuring tools used to indicate potential risks to future financing ability (ie. violating debt covenants) or as a barometer of the defensive position of the company if cash flows are ever an issue. They are long-term solvency metrics and reflect the degree to which the company is financing its operation through debt versus equity. If a company has poor leverage ratios (too much debt), it might need to aggressively finance its growth through debt and as a result require more and more cash flow from operations to adequately service its debt. Our view is that companies with less debt are more likely to be able to withstand challenges or fund opportunities created by the pandemic.

➤ Financial Leverage Ratio = Total Debt / Total Equity: The Financial Leverage Ratio is a measure of the degree to which a company is financing its operations through debt. More specifically, it reflects the ability of shareholder equity to cover all outstanding debts in the event of a business downturn.

➤ Debt-to-Capital Ratio = Total Debt / (Total Debt + Total Shareholder’s Equity): The Debt-to-Capital ratio measures the amount of financial leverage in a company. This tells us whether a company is prone to using debt financing or equity financing. A company with a high Debt-to-Capital ratio, compared to a general or industry average, may be impared due to the cost of servicing debt and therefore increasing its default risk.

➤ Debt-to-Equity Ratio = Total Debt / Total Shareholder’s Equity: A high Debt-to-Equity ratio generally indicates that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of additional interest expense. If the company’s interest expense grows too high, it may increase the company’s chances of a default or bankruptcy.

➤ Debt-to-Assets Ratio = Total Debt / Total Assets: The Debt-to-Assets ratio shows the degree to which a company has used debt to finance its assets. This ratio can be used to evaluate whether a company has enough assets to meet its debt obligations. A ratio greater than 1 indicates that the entire company’s assets are worth less than its debt.