Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We note that Sea Limited (NYSE:SE) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?
What Risk Does Debt Bring?
Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
See our latest analysis for Sea
What Is Sea's Net Debt?
The image below, which you can click on for greater detail, shows that at September 2019 Sea had debt of US$470.6m, up from US$1.1k in one year. However, its balance sheet shows it holds US$2.31b in cash, so it actually has US$1.84b net cash.
How Strong Is Sea's Balance Sheet?
The latest balance sheet data shows that Sea had liabilities of US$2.05b due within a year, and liabilities of US$770.7m falling due after that. Offsetting these obligations, it had cash of US$2.31b as well as receivables valued at US$140.5m due within 12 months. So it has liabilities totalling US$375.3m more than its cash and near-term receivables, combined.
Given Sea has a humongous market capitalization of US$18.5b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Sea also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Sea's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
Over 12 months, Sea reported revenue of US$1.7b, which is a gain of 152%, although it did not report any earnings before interest and tax. So its pretty obvious shareholders are hoping for more growth!
So How Risky Is Sea?
We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Sea had negative earnings before interest and tax (EBIT), over the last year. Indeed, in that time it burnt through US$304m of cash and made a loss of US$1.5b. But the saving grace is the US$1.84b on the balance sheet. That means it could keep spending at its current rate for more than two years. Importantly, Sea's revenue growth is hot to trot. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Take risks, for example - Sea has 2 warning signs we think you should be aware of.
Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discoverour exclusive list of net cash growth stocks, today.
If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
沃倫·巴菲特(WarrenBuffett)曾説過:“波動性遠非風險的代名詞。”因此,聰明的資金似乎知道,當你評估一家公司的風險時,債務--通常與破產有關--是一個非常重要的因素。我們注意到,海洋有限公司(紐約證券交易所市場代碼:Se)在其資產負債表上確實有債務。但更重要的問題是:債務造成的風險有多大?
債務帶來的風險是什麼?
債務是幫助企業發展的一種工具,但如果一家企業無力償還貸款人的債務,那麼它就任由它們擺佈。在最壞的情況下,一家公司如果不能償還其債權人,就可能破產。然而,一個更頻繁(但仍很昂貴)的情況是,一家公司必須以最便宜的價格發行股票,永久稀釋股東,以支撐其資產負債表。話雖如此,最常見的情況是,一家公司合理地管理好自己的債務,併為自己的利益服務。在考慮一家企業使用多少債務時,首先要做的就是把現金和債務放在一起。
見我們對海的最新分析
什麼是海的淨債務?
下面的圖片顯示,到2019年9月,海洋的債務為4.706億美元,高於一年的11萬美元。然而,它的資產負債表顯示,它持有231億美元的現金,因此它實際上擁有18.4億美元的淨現金。
海的資產負債表有多強?
最新的資產負債表數據顯示,SEA在一年內有2.05億美元的負債到期,7.707億美元的負債在此之後到期。作為這些債務的抵消,它有231億美元的現金以及價值1.405億美元的應收款,在12個月內到期。因此,該公司的負債總額為3.753億美元,比其現金和短期應收賬款之和多出3.753億美元.
鑑於海的巨大市值為185億美元,很難相信這些債務構成了很大的威脅。然而,我們認為值得關注的是它的資產負債表實力,因為它可能會隨着時間的推移而改變。雖然它確實有值得注意的負債,但海也擁有比債務更多的現金,所以我們很有信心它能夠安全地管理它的債務。在分析債務水平時,資產負債表是顯而易見的起點。但最重要的是,未來的收益將決定海的未來是否有能力保持健康的資產負債表。因此,如果你專注於未來,你可以查看這份免費報告,顯示分析師的利潤預測。
在過去的12個月裏,海洋公司報告的收入為17億美元,增長了152%,儘管它沒有報告任何利息和税前收入。因此,它相當明顯的股東希望更多的增長!
那麼海有多危險?
我們毫不懷疑,一般來説,虧損公司比盈利公司風險更大。我們確實注意到,在過去的一年裏,SEA有負的息税前收益(EBIT)。事實上,在這段時間裏,它消耗了3.04億美元的現金,損失了15億美元。但儲蓄的好處是資產負債表上的184億美元。這意味着它可能會在超過兩年的時間內保持目前的支出速度。重要的是,海的收入增長是火爆的。雖然不盈利的公司可能有風險,但在盈利前的幾年裏,它們也可以快速而艱難地成長。毫無疑問,我們從資產負債表中學到了大部分關於債務的知識。然而,並非所有的投資風險都存在於資產負債表中--遠遠不是這樣。例如,冒險吧--海有兩個我們認為你應該注意的警告信號。
當然,如果你是那種喜歡在沒有債務負擔的情況下購買股票的投資者,那麼今天,不要猶豫地發現我們唯一的淨現金成長型股票。
如果你發現一個值得糾正的錯誤,請聯繫編輯-Team@simplyWallst.com。這篇文章簡單地説是華爾街的,本質上是一般性的。它不構成買賣任何股票的建議,也不考慮你的目標,或你的財務狀況。簡單地説,華爾街在提到的股票中沒有立場。
我們的目標是為您帶來由基礎數據驅動的長期重點研究分析。請注意,我們的分析可能不考慮最新的價格敏感的公司公告或定性材料。感謝您的閲讀。