Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Infinera Corporation (NASDAQ:INFN) does carry debt. But the more important question is: how much risk is that debt creating?
When Is Debt Dangerous?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.
View our latest analysis for Infinera
How Much Debt Does Infinera Carry?
You can click the graphic below for the historical numbers, but it shows that as of June 2022 Infinera had US$640.6m of debt, an increase on US$461.5m, over one year. However, because it has a cash reserve of US$130.9m, its net debt is less, at about US$509.8m.
NasdaqGS:INFN Debt to Equity History October 1st 2022
How Strong Is Infinera's Balance Sheet?
The latest balance sheet data shows that Infinera had liabilities of US$555.2m due within a year, and liabilities of US$797.1m falling due after that. Offsetting this, it had US$130.9m in cash and US$302.9m in receivables that were due within 12 months. So it has liabilities totalling US$918.5m more than its cash and near-term receivables, combined.
This deficit is considerable relative to its market capitalization of US$1.05b, so it does suggest shareholders should keep an eye on Infinera's use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Infinera can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
In the last year Infinera wasn't profitable at an EBIT level, but managed to grow its revenue by 6.6%, to US$1.5b. We usually like to see faster growth from unprofitable companies, but each to their own.
Caveat Emptor
Importantly, Infinera had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost US$94m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through US$111m of cash over the last year. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Infinera is showing 2 warning signs in our investment analysis , you should know about...
If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
馬克斯説得很好,他不是擔心股價波動,而是我擔心的是永久虧損的可能性……我認識的每個實際投資者都擔心。因此,當你評估一家公司的風險有多大時,聰明的投資者似乎知道債務--通常涉及破產--是一個非常重要的因素。重要的是英飛朗公司納斯達克(Alipay:INFN)確實有債務。但更重要的問題是:這筆債務造成了多大的風險?
債務在什麼時候是危險的?
當一家企業無法輕鬆履行這些義務時,債務和其他債務就會變得有風險,無論是通過自由現金流還是通過以有吸引力的價格籌集資本。最終,如果公司不能履行其償還債務的法定義務,股東可能會一無所有地離開。然而,更常見(但代價仍然高昂)的情況是,一家公司必須以極低的價格發行股票,永久性地稀釋股東的股份,只是為了支撐其資產負債表。話雖如此,最常見的情況是一家公司對債務管理得相當好--並對自己有利。當我們考慮一家公司的債務用途時,我們首先會把現金和債務放在一起看。
查看我們對英飛朗的最新分析
英飛朗揹負着多少債務?
你可以點擊下圖查看歷史數據,但它顯示,截至2022年6月,英飛朗的債務為6.406億美元,比一年前增加了4.615億美元。然而,由於它擁有1.309億美元的現金儲備,其淨債務較少,約為5.098億美元。
NasdaqGS:INFN債轉股歷史2022年10月1日
英飛朗的資產負債表有多強勁?
最新的資產負債表數據顯示,英飛朗有5.552億美元的債務在一年內到期,7.971億美元的債務在一年後到期。作為抵消,它有1.309億美元的現金和3.029億美元的應收賬款在12個月內到期。因此,它的負債總額比現金和近期應收賬款的總和高出9.185億美元。
與英飛朗10.5億美元的市值相比,這一赤字是相當可觀的,因此它確實表明股東應該密切關注英飛朗的債務使用情況。如果它的貸款人要求它支撐資產負債表,股東可能會面臨嚴重的稀釋。在分析債務水平時,資產負債表顯然是一個起點。但最終,該業務未來的盈利能力將決定英飛朗能否隨着時間的推移加強其資產負債表。因此,如果你想看看專業人士的想法,你可能會發現這份關於分析師利潤預測的免費報告很有趣。
去年,英飛朗在息税前利潤水平上沒有盈利,但其收入增長了6.6%,達到15億美元。我們通常喜歡看到不盈利的公司實現更快的增長,但每個公司都有自己的特點。
告誡買入者
重要的是,英飛朗去年出現了息税前收益(EBIT)虧損。事實上,它在息税前利潤水平上虧損了9400萬美元。考慮到除了上面提到的債務,我們對公司應該使用如此多的債務沒有太大的信心。因此,我們認為它的資產負債表有點緊張,但並不是無法修復。然而,它在過去一年燒掉了1.11億美元的現金,這也於事無補。因此,簡而言之,這是一隻非常有風險的股票。在分析債務水平時,資產負債表顯然是一個起點。但歸根結底,每家公司都可能包含存在於資產負債表之外的風險。請注意,英飛朗正在上映我們的投資分析中的2個警告信號,你應該知道關於……
如果你對一家增長迅速、資產負債表堅如磐石的公司更感興趣,那麼請立即查看我們的淨現金成長型股票清單。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。