Total Liabilities – Free Bassuk http://freebassuk.com/ Fri, 21 Jan 2022 16:40:24 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://freebassuk.com/wp-content/uploads/2021/07/icon.png Total Liabilities – Free Bassuk http://freebassuk.com/ 32 32 Does Ichor Holdings (NASDAQ:ICHR) have a healthy balance sheet? https://freebassuk.com/does-ichor-holdings-nasdaqichr-have-a-healthy-balance-sheet/ Fri, 21 Jan 2022 16:31:14 +0000 https://freebassuk.com/does-ichor-holdings-nasdaqichr-have-a-healthy-balance-sheet/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We notice that Ichor Holdings, Ltd. (NASDAQ:ICHR) has debt on its balance sheet. But should shareholders worry about its use of debt?

Why is debt risky?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

See our latest analysis for Ichor Holdings

What is Ichor Holdings’ net debt?

The image below, which you can click on for more details, shows Ichor Holdings had $164.4 million in debt at the end of September 2021, a reduction from $202.2 million year-over-year . But he also has $226.7 million in cash to offset that, meaning he has a net cash of $62.3 million.

NasdaqGS: ICHR Debt to Equity History January 21, 2022

How healthy is Ichor Holdings’ balance sheet?

Zooming in on the latest balance sheet data, we can see that Ichor Holdings had liabilities of US$181.0 million due within 12 months and liabilities of US$166.9 million due beyond. On the other hand, it had liquidities of 226.7 million dollars and 121.7 million dollars of receivables at less than one year. These liquid assets therefore roughly correspond to the total liabilities.

This state of affairs indicates that Ichor Holdings’ balance sheet looks quite strong, as its total liabilities roughly equal its liquid assets. So while it’s hard to imagine the US$1.20 billion company struggling for cash, we still think it’s worth keeping an eye on its balance sheet. Simply put, the fact that Ichor Holdings has more cash than debt is arguably a good indication that it can safely manage its debt.

Even better, Ichor Holdings increased its EBIT by 128% last year, which is an impressive improvement. This boost will make it even easier to pay off debt in the future. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the company’s future profitability will decide whether Ichor Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

Finally, while the taxman may love accounting profits, lenders only accept cash. Although Ichor Holdings has net cash on its balance sheet, it’s still worth looking at its ability to convert earnings before interest and taxes (EBIT) to free cash flow, to help us understand how quickly it’s building (or erodes) that treasury. balance. Over the past three years, Ichor Holdings has produced strong free cash flow equivalent to 74% of its EBIT, which is what we expected. This cold hard cash allows him to reduce his debt whenever he wants.

Summary

While we sympathize with investors who find debt a concern, you should keep in mind that Ichor Holdings has net cash of US$62.3 million, as well as more liquid assets than liabilities. . And we liked the look of EBIT growth of 128% YoY last year. So is Ichor Holdings’ debt a risk? This does not seem to us to be the case. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks reside on the balance sheet, far from it. For example, we found 1 warning sign for Ichor Holdings which you should be aware of before investing here.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

]]>
These 4 metrics indicate that Pizu Group Holdings (HKG:8053) is making extensive use of debt https://freebassuk.com/these-4-metrics-indicate-that-pizu-group-holdings-hkg8053-is-making-extensive-use-of-debt/ Tue, 18 Jan 2022 00:10:37 +0000 https://freebassuk.com/these-4-metrics-indicate-that-pizu-group-holdings-hkg8053-is-making-extensive-use-of-debt/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The greatest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Like many […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The greatest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Like many other companies Pizu Group Holdings Limited (HKG:8053) uses debt. But should shareholders worry about its use of debt?

When is debt dangerous?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case, a company can go bankrupt if it cannot pay its creditors. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. That said, the most common situation is when a company manages its debt reasonably well – and to its own benefit. The first thing to do when considering how much debt a business has is to look at its cash and debt together.

Check out our latest analysis for Pizu Group Holdings

How much debt does Pizu Group Holdings have?

You can click on the graph below for historical figures, but it shows that in September 2021, Pizu Group Holdings had 1.01 billion yen in debt, an increase of 322.7 million yen, year-on-year. However, he also had 431.5 million yen in cash, so his net debt is 577.0 million yen.

SEHK: 8053 Historical Debt to Equity January 18, 2022

How strong is Pizu Group Holdings’ balance sheet?

The latest balance sheet data shows that Pizu Group Holdings had liabilities of 1.06 billion yen maturing within one year, and liabilities of 664.6 million yen maturing thereafter. On the other hand, it had liquid assets of 431.5 million Canadian yen and 790.7 million national yen of receivables due within one year. Thus, its liabilities total 499.5 million Canadian yen more than the combination of its cash and short-term receivables.

This shortfall is not that bad as Pizu Group Holdings is worth 1.24 billion Canadian yen and therefore could probably raise enough capital to shore up its balance sheet, should the need arise. But it is clear that it is essential to examine closely whether it can manage its debt without dilution.

In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

Pizu Group Holdings has a low net debt to EBITDA ratio of just 1.3. And its EBIT covers its interest charges 23.9 times. One could therefore say that he is no more threatened by his debt than an elephant is by a mouse. Its low leverage may become crucial for Pizu Group Holdings if management cannot prevent a repeat of the 32% reduction in EBIT over the past year. When a company sees its profit reservoir, it can sometimes find its relationship with its lenders soured. When analyzing debt levels, the balance sheet is the obvious starting point. But you can’t look at debt in total isolation; since Pizu Group Holdings will need revenue to repay this debt. So, if you want to know more about its earnings, it might be worth checking out this graph of its long-term trend.

Finally, while the taxman may love accounting profits, lenders only accept cash. So the logical step is to look at what proportion of that EBIT is actual free cash flow. Over the past three years, Pizu Group Holdings has produced strong free cash flow equivalent to 61% of its EBIT, which is what we expected. This cold hard cash allows him to reduce his debt whenever he wants.

Our point of view

Neither the ability of Pizu Group Holdings to increase its EBIT nor its level of total liabilities gave us confidence in its ability to take on more debt. But the good news is that it seems to be able to easily cover its interest costs with its EBIT. We think Pizu Group Holdings’ debt makes it a bit risky, after looking at the aforementioned data points together. Not all risk is bad, as it can increase stock price returns if it pays off, but this leverage risk is worth keeping in mind. When analyzing debt levels, the balance sheet is the obvious starting point. However, not all investment risks reside on the balance sheet, far from it. For example, we have identified 5 warning signs for Pizu Group Holdings of which you should be aware.

If you are interested in investing in companies that can generate profits without the burden of debt, then check out this free list of growing companies that have net cash on the balance sheet.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

]]>
National Bank of Georgia shares data on liabilities to non-residents… https://freebassuk.com/national-bank-of-georgia-shares-data-on-liabilities-to-non-residents/ Sun, 16 Jan 2022 07:10:54 +0000 https://freebassuk.com/national-bank-of-georgia-shares-data-on-liabilities-to-non-residents/ (MENAFN – Trends News Agency) BAKU, Azerbaijan, January 16 By Maryana Akhmedova – Trending: Central Bank of Georgia liabilities to non-residents from January to December 2021 amounted to 29.8 million Georgian lari ($9.6 million), an increase of 71.2%, compared to 17, 4 million Georgian lari ($5.6 million) over the same period of 2020, Trend reports […]]]>

(MENAFN – Trends News Agency)

BAKU, Azerbaijan, January 16

By Maryana Akhmedova – Trending:

Central Bank of Georgia liabilities to non-residents from January to December 2021 amounted to 29.8 million Georgian lari ($9.6 million), an increase of 71.2%, compared to 17, 4 million Georgian lari ($5.6 million) over the same period of 2020, Trend reports via National Bank of Georgia (NBG) statistical data.

Of the total Central Bank liabilities to non-residents, the use of Fund credits and loans amounted to 17.3 million Georgian lari ($5.5 million) in 2021, an increase 78.3%, compared to 9.7 million Georgian lari ($3.1 million) in 2020.

Meanwhile, Special Drawing Rights (SDR) allocations amounted to 12.3 million Georgian lari ($3.9 million) in 2021, an increase of 64%, compared to 7.5 million Georgian lari ( $2.4 million) in 2020.

Financial derivatives accounted for 46,257 Georgian lari ($14,969) of the Central Bank’s total liabilities to nonresidents, down 45.9% from 85,561 Georgian lari ($27,689) in 2020.

Deposits amounted to 92,980 Georgian lari ($30,090) in 2021, an increase of 126.7%, compared to 41,000 Georgian lari ($13,268) in 2020.

Follow the author on Twitter: @mariiiakhm

MENAFN16012022000187011040ID1103545556

Legal disclaimer: MENAFN provides the information “as is” without warranty of any kind. We assume no responsibility for the accuracy, content, images, videos, licensing, completeness, legality or reliability of any information in this article. If you have any complaints or copyright issues related to this article, please contact the provider above.

]]>
Datadog Stock: Looks Like A Sell (NASDAQ: DDOG) https://freebassuk.com/datadog-stock-looks-like-a-sell-nasdaq-ddog/ Fri, 14 Jan 2022 15:27:00 +0000 https://freebassuk.com/datadog-stock-looks-like-a-sell-nasdaq-ddog/ nespix/iStock via Getty Images Introduction and Thesis Datadog (DDOG) has been one of the hottest stocks in the stock market. The company’s stock price has seen massive growth throughout 2021. However, the positive trend started to change towards the end of the year, and I believe this negative price movement trend will persist throughout throughout […]]]>

nespix/iStock via Getty Images

Introduction and Thesis

Datadog (DDOG) has been one of the hottest stocks in the stock market. The company’s stock price has seen massive growth throughout 2021. However, the positive trend started to change towards the end of the year, and I believe this negative price movement trend will persist throughout throughout 2022.

Datadog has been rewarded with share price growth due to its strong fundamentals and financial performance bringing extremely high valuations. In a world where the use of data is becoming a near necessity, Datadog continued to deliver exceptional services by driving both operational efficiency and revenue growth. Everything about the company pointed to better prospects, except for its valuation. Due to massive optimism for the future of the company, the valuation has reached an unreasonable level, making the risk-reward aspect of investing unfavorable. Additionally, as the Federal Reserve heads into contractionary policy through 2022, I believe the current lofty valuation will see a correction. Therefore, I think Datadog is a sell today, primarily given its valuation metrics.

Fundamentals

Besides Datadog’s valuation, the company’s investment thesis seems near perfect. The underlying fundamental thesis strengthens over time as the company’s growth shows strong continuous sequential improvement.

It’s important to note that Datadog is still in the early stages of growth, which means the company is primarily focused on growth rather than profitability and efficiency. Thus, the potential for dramatic improvement in operational efficiency after this initial phase of growth was measured by the net dollar retention rate and the number of customers using multiple products. The dollar-based net retention rate has been over 130% for the past 16 quarters, while the gross retention rate has reached around 90%, showing strong demand and product stickiness.

Gross retention rate TTM

https://investors.datadoghq.com/static-files/e0597c76-5970-453b-88ee-b862d2f4a68a

[Source]

Additionally, through product expansion, Datadog has been up-selling and cross-selling its product, unlocking more potentials. Through continued investment in R&D, Datadog has accelerated the development of new products, including security, log management, and user experience monitoring, as seen in the first image below. Ultimately, the innovation led to a dramatic increase in the number of customers using a multitude of Datadog products proving two things. First, Datadog’s services are in high demand. Second, once Datadog begins to focus on profitability, operating margins will be extremely high due to potential operational efficiencies that can be achieved from the SaaS business model with a multitude of product offerings.

The Datadog Innovation Story

https://investors.datadoghq.com/static-files/e0597c76-5970-453b-88ee-b862d2f4a68a

[Source]

Number of customers using more than one product

https://investors.datadoghq.com/static-files/e0597c76-5970-453b-88ee-b862d2f4a68a

[Source]

finance

Datadog’s financial performance is also quite strong. The company reported revenue growth of 75% to $270 million while operating at near-break-even levels. GAAP net loss was $4.9 million while non-GAAP net income was $44 million. The variance was primarily due to stock-based compensation, SBC, of ​​approximately $44 million. However, outside of SBC, the company has shown strong revenue growth with continued operation close to break-even.

The company’s balance sheet was also quite strong. Datadog had total cash and short-term investments of approximately $1.47 billion with total assets of approximately $2.2 billion, and the company had total liabilities of approximately $1.24 billion. billion, including approximately $734 million in long-term debt. Given the total liabilities to assets (L/A) ratio of around 56.4% and manageable debt given close to breakeven trades and a huge pile of cash, I think health the company’s financial position is capable of supporting the future operations and objectives of the company.

Overall, Datadog’s relevance is expected to grow as the need for this software is only expected to increase, which will be followed by positive financial performance.

Valuation and stock-based compensation

Behind this wall of positive factors that bolster investor sentiment toward Datadog, questionable stock-based compensation (SBC) practices and valuation levels make an investment in Datadog unfavorable today.

CCS

Starting with SBC, the new public companies increased SBC justifying its actions citing talent retention. These tech companies, including Datadog, have diluted their shareholders to extreme levels for growth reasons, and I think the increase in Datadog’s SBC, both relatively and absolutely, is a concern.

In Q1 2021, Datadog’s SBC was $28.86 million. Then, in the second quarter of 2021, the SBC increased by 20% sequentially to approximately $34.5 million, and in the third quarter of 2021, the SBC further increased by 27.5% sequentially to approximately $44 million. Relative to revenue, SBC accounted for 14.5% of revenue in Q1 2021, 14.7% in Q2 2021, and 16.3% in Q3 2021, showing that SBC growth matches growth in business income.

Talent retention in today’s market can be significant, and tens of millions of dollars in SBCs relative to Datadog’s entire market cap can be low; however, I think SBC growing faster than earnings show is a clear warning sign for investors.

Evaluation

The main reason for my negative views on Datadog comes from its high valuation. The company has a market ccapitalization of around $45 billion with a price-to-sales ratio of around 51x. To iterate, the company trades at 51x earnings whileWe continuously expect close to break-even operations. I just think that this level of valuation, despite future potential and current growth, is absurd. Even the two-year forward P/E ratio sits at around 255x. The expected future return will simply be too low at this level. For example, assuming the company reports revenue of $2.2 billion with gross margins around 30%, which is on the high end of the estimate, for fiscal year 2023 the company will trade still at around 65 times its earnings. Given current market conditions, I think it’s only a matter of time before investors realize that big companies can have bad stocks.

The high valuation problem has worsened in recent weeks as the Federal Reserve has begun to hint that it will change course in its monetary policy. Since the start of the pandemic, the Federal Reserve has been implementing an expansionary policy with massive quantitative easing and historically low interest rates bringing M2 to an all-time high justifying some high valuation levels. Simply, there was too much money in circulation with low interest rates leading to a concentration of capital in the stock market leading to a higher valuation. However, the Federal Reserve is expected to end the cut by March and potentially start raising rates as early as March to fight inflation. The Federal Reserve went even further by announcing that it intended to shrink its balance sheets, warning that it would begin to reduce the flow of cash that has driven higher valuations. Therefore, given these macro conditions, I think Datadog’s stock seeing a correction is only a matter of time.

Risks for the thesis

Datadog benefits from two massive secular trends. A move to the cloud and demand for data usage has driven growth and strong fundamentals. Additionally, since SaaS companies typically receive a higher valuation than their peers, Datadog’s stock may never see a correction. The combination of beneficial underlying trends and strong growth may be enough to overcome the high valuation.

Summary

Datadog is undoubtedly a great company with huge potential. The business will only become more important and relevant to businesses. However, valuation and SBC need to be addressed. SBC in terms of revenue continues to grow to dilute shareholder value while the upcoming shift in macro metrics is expected to put pressure on high value companies. Therefore, I think Datadog is a perfect example of a big company and bad stock. Despite excellent and improving fundamentals, I think Datadog is a sell mainly due to its high valuation.

]]>
Is Kakatiya Cement Sugar and Industries (NSE: KAKATCEM) Using Too Much Debt? https://freebassuk.com/is-kakatiya-cement-sugar-and-industries-nse-kakatcem-using-too-much-debt/ Sun, 09 Jan 2022 03:24:46 +0000 https://freebassuk.com/is-kakatiya-cement-sugar-and-industries-nse-kakatcem-using-too-much-debt/ Warren Buffett said: “Volatility is far from synonymous with risk”. It’s only natural to consider a company’s balance sheet when looking at its level of risk, as debt is often involved when a business collapses. We can see that Kakatiya Cement Sugar and Industries Limited (NSE: KAKATCEM) uses debt in its activity. But should shareholders […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk”. It’s only natural to consider a company’s balance sheet when looking at its level of risk, as debt is often involved when a business collapses. We can see that Kakatiya Cement Sugar and Industries Limited (NSE: KAKATCEM) uses debt in its activity. But should shareholders be concerned about its use of debt?

Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company cannot repay it easily, either by raising capital or with its own cash flow. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that he has to raise new equity at low cost, thereby constantly diluting shareholders. Of course, debt can be an important tool in businesses, especially capital intensive businesses. The first step in examining a business’s debt levels is to consider its cash flow and debt together.

Check out our latest review for Kakatiya Cement Sugar and Industries

What is the net debt of Kakatiya Cement Sugar and Industries?

As you can see below, Kakatiya Cement Sugar and Industries had a debt of 128.1 million yen in September 2021, up from 289.2 million yen the previous year. However, it has 1.02 billion yen in cash to compensate for this, which leads to a net cash position of 892.8 million yen.

NSEI: KAKATCEM History of debt on equity January 9, 2022

How strong is Kakatiya Cement Sugar and Industries’ balance sheet?

Zooming in on the latest balance sheet data, we can see that Kakatiya Cement Sugar and Industries had liabilities of 576.6 million yen owed within 12 months and liabilities of 100.5 million yen beyond. In compensation for these obligations, it had cash of 1.02 million as well as receivables valued at 203.2 million at 12 months. He can therefore boast of having € 547.0 million in liquid assets more than total Liabilities.

It is good to see that Kakatiya Cement Sugar and Industries has a lot of liquidity on its balance sheet, which suggests careful management of liabilities. Because he has a lot of assets, he is unlikely to have any problems with his lenders. Put simply, the fact that Kakatiya Cement Sugar and Industries has more cash than debt is arguably a good indication that it can safely manage its debt.

Even more impressively, Kakatiya Cement Sugar and Industries increased its EBIT by 547% year over year. This boost will make it even easier to pay down debt in the future. When analyzing debt levels, the balance sheet is the obvious place to start. But you can’t look at debt in isolation; since Kakatiya Cement Sugar and Industries will need revenue to repay this debt. So, when considering debt, it is really worth looking at the profit trend. Click here for an interactive snapshot.

But our last consideration is also important, because a business cannot pay its debts with paper profits; he needs hard cash. Kakatiya Cement Sugar and Industries may have net cash on the balance sheet, but it is always interesting to examine the extent to which the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its need for, and its ability to manage debt. Fortunately for all shareholders, Kakatiya Cement Sugar and Industries has actually generated more free cash flow than EBIT over the past three years. There is nothing better than cash flow to stay in the good graces of your lenders.

In summary

While we sympathize with investors who find debts to be of concern, you should keep in mind that Kakatiya Cement Sugar and Industries has a net cash position of 892.8 million yen, as well as more liquid assets. that of liabilities. The icing on the cake is that he converted 312% of that EBIT into free cash flow, bringing in 70 million euros. In the end, we do not find the debt levels of Kakatiya Cement Sugar and Industries worrying at all. When analyzing debt levels, the balance sheet is the obvious place to start. However, not all investment risks lie on the balance sheet – far from it. For example, Kakatiya Cement Sugar and Industries has 2 warning signs (and 1 that can’t be ignored) we think you should be aware of.

At the end of the day, it’s often best to focus on businesses that don’t have net debt. You can access our special list of these companies (all with a history of profit growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.


Source link

]]>
We believe Severn Trent (LON: SVT) is taking risks with his debt https://freebassuk.com/we-believe-severn-trent-lon-svt-is-taking-risks-with-his-debt/ Wed, 05 Jan 2022 08:03:45 +0000 https://freebassuk.com/we-believe-severn-trent-lon-svt-is-taking-risks-with-his-debt/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Above all, Severn […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from risk.” When we think about how risky a business is, we always like to look at its use of debt because debt overload can lead to bankruptcy. Above all, Severn Trent Plc (LON: SVT) is in debt. But should shareholders be concerned about its use of debt?

What risk does debt entail?

Debt is a tool to help businesses grow, but if a business is unable to repay its lenders, then it exists at their mercy. If things really go wrong, lenders can take over the business. However, a more common (but still painful) scenario is that he has to raise new equity at low cost, thereby constantly diluting shareholders. That said, the most common situation is where a business manages its debt reasonably well – and to its own advantage. When we think of a business’s use of debt, we first look at cash flow and debt together.

Check out our latest analysis for Severn Trent

How much debt does Severn Trent have?

The graph below, which you can click for more details, shows Severn Trent owed £ 6.35 billion in debt as of September 2021; about the same as the year before. Net debt is about the same because it doesn’t have a lot of cash.

LSE: SVT History of debt to equity January 5, 2022

How strong is Severn Trent’s balance sheet?

Zooming in on the latest balance sheet data, we can see that Severn Trent had a liability of £ 958.3million due within 12 months and a liability of £ 9.07 billion beyond. In compensation for these obligations, it had cash of £ 53.9 million as well as receivables valued at £ 551.0 million maturing within 12 months. As a result, its liabilities exceed the sum of its cash and (short-term) receivables by £ 9.43 billion.

When you consider that this deficit exceeds the company’s £ 7.36 billion market cap, you might well be inclined to take a close look at the balance sheet. Hypothetically, extremely high dilution would be required if the company were forced to repay its debts by raising capital at the current share price.

We use two main ratios to inform us about the levels of debt compared to earnings. The first is net debt divided by earnings before interest, taxes, depreciation, and amortization (EBITDA), while the second is the number of times its profit before interest and taxes (EBIT) covers its interest expense (or its coverage of interest, for short). The advantage of this approach is that we take into account both the absolute amount of debt (with net debt versus EBITDA) and the actual interest charges associated with this debt (with its coverage rate). interests).

Severn Trent shareholders face the double whammy of a high net debt to EBITDA ratio (7.5) and fairly low interest coverage, since EBIT is only 2.4 times interest debtors. This means that we would consider him to be in heavy debt. Given the leverage, it is not ideal that Severn Trent’s EBIT has been fairly stable over the past twelve months. The balance sheet is clearly the area to focus on when analyzing debt. But it is future profits, more than anything, that will determine Severn Trent’s ability to maintain a healthy balance sheet going forward. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.

Finally, while the IRS may love accounting profits, lenders only accept hard cash. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, Severn Trent’s free cash flow has been 28% of its EBIT, less than we expected. This low cash conversion makes debt management more difficult.

Our point of view

To be frank, Severn Trent’s level of total liabilities and his track record of managing his debt, based on his EBITDA, makes us rather uncomfortable with his debt levels. But at least its EBIT growth rate isn’t that bad. It’s also worth noting that water utility companies like Severn Trent generally use debt without a problem. Overall, it seems to us that Severn Trent’s track record is really very risky for the company. We are therefore almost as wary of this stock as a hungry kitten falls into its owner’s fish pond: once bitten, twice shy, as they say. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks lie on the balance sheet – far from it. For example, we have identified 3 warning signs for Severn Trent (1 is not doing too well with us) you should be aware of.

Of course, if you are the type of investor who prefers to buy stocks without going into debt, feel free to check out our exclusive list of cash net growth stocks today.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.


Source link

]]>
Evergrande suspends trading in Hong Kong shares https://freebassuk.com/evergrande-suspends-trading-in-hong-kong-shares/ Mon, 03 Jan 2022 06:03:20 +0000 https://freebassuk.com/evergrande-suspends-trading-in-hong-kong-shares/ By Diksha Madhok, CNN Business Chinese under siege Real estate developer Evergrande suspended operations in Hong Kong on Monday as the heavily indebted company faces an ongoing real estate crisis. Evergrande said in a file on the Hong Kong Stock Exchange that the trading halt was pending an “announcement containing inside information,” although he did […]]]>

By Diksha Madhok, CNN Business

Chinese under siege Real estate developer Evergrande suspended operations in Hong Kong on Monday as the heavily indebted company faces an ongoing real estate crisis.

Evergrande said in a file on the Hong Kong Stock Exchange that the trading halt was pending an “announcement containing inside information,” although he did not elaborate.

The company has around $ 300 billion in total liabilities, and analysts have been wondering for months whether a collapse could trigger a broader crisis in the Chinese real estate market, hurting homeowners and the financial system as a whole. The US Federal Reserve warned last year that China’s real estate problems could hurt the global economy.

In December, Fitch Ratings said the company defaulted on its debt, a downgrade, the rating agency said, reflecting Evergrande’s inability to pay interest due that month on two dollar-denominated bonds.

The company’s shares were rocked last week after further debt payment deadlines passed with no sign that it had fulfilled its obligations, though it has a 30-day grace period to pay those debts. (Fitch’s downgrade came when Evergrande appeared to miss payments after their grace periods expired.)

Evergrande did not immediately respond to a request for comment on his decision to stop the actions on Monday.

As the company’s financial woes escalated, it received positive news last month saying it had made early progress in resuming construction. Company chairman Hui Ka Yan said no one in the company would be allowed to “lay flat” and pledged to deliver 39,000 units of properties in December.

This number was a huge jump from the less than 10,000 units delivered by the company in each of the previous three months.

And, there are signs that Chinese authorities are taking action to contain the fallout from the company’s downward spiral and guide it through a restructuring of its debt and business operations.

Evergrande announced in December that it would set up a risk management committee, including government officials, to focus on “mitigating and eliminating” future risks. Its members include senior officials from large state-owned enterprises in Guangdong, as well as an executive from a major central government bad debt manager.

The People’s Bank of China has also said it will inject $ 188 billion into the economy, apparently to counter the housing crisis, which accounts for nearly a third of China’s GDP.

– Laura He contributed to this report.

The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.


Source link

]]>
Is Ponsse Oyj (HEL: PON1V) a risky investment? https://freebassuk.com/is-ponsse-oyj-hel-pon1v-a-risky-investment/ Sat, 01 Jan 2022 06:58:20 +0000 https://freebassuk.com/is-ponsse-oyj-hel-pon1v-a-risky-investment/ David Iben put it well when he said, “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ So it seems like smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess the […]]]>

David Iben put it well when he said, “Volatility is not a risk we care about. What matters to us is to avoid the permanent loss of capital. ‘ So it seems like smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess the level of risk of a business. Like many other companies Ponsse Oyj (HEL: PON1V) uses debt. But should shareholders be concerned about its use of debt?

Why Does Debt Bring Risk?

Generally speaking, debt only becomes a real problem when a company cannot repay it easily, either by raising capital or with its own cash flow. In the worst case scenario, a business can go bankrupt if it cannot pay its creditors. While it’s not too common, we often see indebted companies continually diluting their shareholders because lenders are forcing them to raise capital at a ridiculous price. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution of a business with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash flow and debt together.

Check out our latest review for Ponsse Oyj

What is Ponsse Oyj’s net debt?

The image below, which you can click for more details, shows that Ponsse Oyj had a debt of 54.2 million euros at the end of September 2021, compared to 161.8 million euros over one year. But he also has € 75.5million in cash to make up for that, meaning he has € 21.3million in net cash.

HLSE: PON1V History of debt to equity January 1, 2022

A look at the responsibilities of Ponsse Oyj

Zooming in on the latest balance sheet data, we can see that Ponsse Oyj had a liability of 147.0 million euros due within 12 months and a liability of 51.5 million euros due beyond. On the other hand, it had cash of € 75.5 million and € 69.2 million in receivables within one year. Its liabilities therefore amount to € 53.8 million more than the combination of its cash and short-term receivables.

Considering that Ponsse Oyj has a market cap of 1.18 billion euros, it’s hard to believe that these liabilities pose a big threat. However, we think it’s worth keeping an eye on the strength of its balance sheet as it can change over time. While he has some liabilities to note, Ponsse Oyj also has more cash than debt, so we’re pretty confident that he can handle his debt safely.

The good news is that Ponsse Oyj has increased its EBIT by 7.0% year over year, which should allay concerns about debt repayment. When analyzing debt levels, the balance sheet is the obvious place to start. But it is future profits, more than anything, that will determine Ponsse Oyj’s ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free Analyst Profit Forecast report interesting.

Finally, a business needs free cash flow to pay off debts; accounting profits are not enough. Ponsse Oyj may have net cash on the balance sheet, but it’s always interesting to see how well the business converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its need and capacity. to manage debt. Over the past three years, Ponsse Oyj has generated strong free cash flow equivalent to 67% of its EBIT, roughly what we expected. This free cash flow puts the business in a good position to repay debt, if any.

In summary

While it always makes sense to look at a company’s total liabilities, it is very reassuring that Ponsse Oyj has € 21.3 million in net cash. And he impressed us with free cash flow of 83 million euros, or 67% of his EBIT. We therefore do not believe that Ponsse Oyj’s use of debt is risky. Over time, stock prices tend to follow earnings per share, so if you are interested in Ponsse Oyj, you can click here to view an interactive graph of its historical earnings per share.

If, after all of this, you’re more interested in a fast-growing company with a strong balance sheet, take a quick look at our list of cash-flow net-growth stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.


Source link

]]>
DTEGY or TU: what is the best value right now? – December 30, 2021 https://freebassuk.com/dtegy-or-tu-what-is-the-best-value-right-now-december-30-2021/ Thu, 30 Dec 2021 16:02:57 +0000 https://freebassuk.com/dtegy-or-tu-what-is-the-best-value-right-now-december-30-2021/ Investors interested in stocks in the diversified communications services sector have probably heard of Deutsche Telekom AG (Quick quote DTEGYDTEGY – Free report) and Telus (Quick quote TUYOU – Free report). But which of these two stocks is offering the best value for value investors right now? We will have to take a closer look. […]]]>

Investors interested in stocks in the diversified communications services sector have probably heard of Deutsche Telekom AG (DTEGY Free report) and Telus (YOU Free report). But which of these two stocks is offering the best value for value investors right now? We will have to take a closer look.

Everyone has their own methods of finding great value opportunities, but our model includes pairing an impressive score in the Value category of our style scoring system with a strong Zacks Rank. Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our style scores allow companies to be rated based on specific characteristics.

Deutsche Telekom AG has a Zacks rank of # 2 (Buy), while Telus has a Zacks rank of # 3 (Hold) at this time. This means that DTEGY’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with the improving outlook for analysts. But that’s only part of the picture for value investors.

Value investors also tend to look at a number of traditional and proven numbers to help them find stocks they believe are undervalued at their current price levels.

Our Value category ranks stocks based on a number of key metrics, including proven P / E ratio, P / S ratio, earnings performance and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

DTEGY currently has a forward P / E of 13.39, while TU has a forward P / E of 27.17. We also note that DTEGY has a PEG ratio of 1.36. This metric is used similarly to the famous P / E ratio, but the PEG ratio also takes into account the expected growth rate of the stock’s earnings. TU currently has a PEG ratio of 3.02.

Another notable valuation indicator for DTEGY is its P / B ratio of 0.95. P / B is a method of comparing the market value of a stock to its book value, which is defined as total assets minus total liabilities. By comparison, TU has a P / B of 2.51.

These measures, and several others, help DTEGY achieve a value rating of A, while TU received a value rating of C.

DTEGY currently shows an improving earnings outlook, which makes it stand out in our Zacks Rank model. And, based on the valuation metrics above, we think DTEGY is probably the top value option right now.


Source link

]]>
Total government liabilities rose to 125.71 trillion rupees in September quarter: data https://freebassuk.com/total-government-liabilities-rose-to-125-71-trillion-rupees-in-september-quarter-data/ Tue, 28 Dec 2021 17:54:00 +0000 https://freebassuk.com/total-government-liabilities-rose-to-125-71-trillion-rupees-in-september-quarter-data/ Total government liabilities rose to Rs 125.71 lakh crore in the September quarter, from Rs 120.91 lakh crore in the three months ended June, according to the latest public debt management report. This increase reflects a quarterly increase of 3.97% during the period July-September 2021-2022. In absolute terms, total liabilities, including government ‘public account’ liabilities, […]]]>

Total government liabilities rose to Rs 125.71 lakh crore in the September quarter, from Rs 120.91 lakh crore in the three months ended June, according to the latest public debt management report.

This increase reflects a quarterly increase of 3.97% during the period July-September 2021-2022.

In absolute terms, total liabilities, including government ‘public account’ liabilities, jumped to Rs 125 71 747 crore at the end of September 2021.

At the end of June, the total liabilities stood at Rs.12091193 crore.

The report was released Tuesday by the Ministry of Finance.

Public debt represented 91.15 percent of total outstanding liabilities in the September quarter compared to 91.60 percent at the end of June.

Almost 30.56% of dated securities in circulation had a residual maturity of less than 5 years. The ownership model showed the share of commercial banks at 37.82 percent and that of insurance companies at 24.18 percent in the September quarter.

Yields on government securities hardened in the secondary market, according to the report, due to an increase in the supply of government securities during the September quarter.

In the secondary market, trading activity was focused on the 3-7 year maturity band during the September quarter, mainly due to the lower trading observed in the 10-year benchmark securities due to the low floating.

However, yields were buoyed by the decision of the RBI’s Monetary Policy Committee to keep the policy repo rate at 4%, maintain an accommodative stance, and proceed with open market purchases as part of the. G-SAP 2.0 during the July to September quarter. the fiscal.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

Dear reader,

Business Standard has always strived to provide up-to-date information and commentary on developments that matter to you and have broader political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these difficult times resulting from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative views and cutting-edge commentary on relevant current issues.
However, we have a demand.

As we fight the economic impact of the pandemic, we need your support even more so that we can continue to provide you with more quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of providing you with even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital editor


Source link

]]>