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 can be obvious that you need to take debt into account, when thinking about the risk of any given stock, because too much debt can sink a business. Mostly, The Liberty Braves group (NASDAQ: BATR.K) is in debt. But does this debt worry shareholders?
When is debt dangerous?
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. If things really go wrong, lenders can take over the business. 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, debt can be an important tool in businesses, especially capital intensive businesses. The first thing to do when considering how much debt a business uses is to look at its cash flow and debt together.
See our latest analysis for Liberty Braves Group
What is the debt of the Liberty Braves group?
The graph below, which you can click for more details, shows that Liberty Braves Group had $ 672.0 million in debt as of March 2021; about the same as the year before. On the other hand, it has $ 181.0 million in cash, resulting in net debt of around $ 491.0 million.
A look at the responsibilities of the Liberty Braves group
Zooming in on the latest balance sheet data, we can see that Liberty Braves Group had a liability of US $ 219.0 million due within 12 months and a liability of US $ 1.12 billion due beyond. In compensation for these obligations, he had cash of US $ 181.0 million as well as receivables valued at US $ 25.0 million due within 12 months. Its liabilities therefore total US $ 1.13 billion more than the combination of its cash and short-term receivables.
This is a mountain of leverage compared to its market cap of US $ 1.43 billion. If its lenders asked it to consolidate the balance sheet, shareholders would likely face severe dilution. When analyzing debt levels, the balance sheet is the obvious starting point. But ultimately, the company’s future profitability will decide whether Liberty Braves Group can strengthen its balance sheet over time. So if you are focused on the future you can check this out free report showing analysts’ earnings forecasts.
Given that it has no significant operating income at the moment, shareholders are hopeful that Liberty Braves Group can grow and better benefit from the company, before it runs out of cash.
Not only has Liberty Braves Group’s revenue declined over the past twelve months, it has also produced negative earnings before interest and taxes (EBIT). To be precise, the EBIT loss amounted to US $ 124 million. When we look at this and recall the liabilities on its balance sheet, versus the cash flow, it seems unwise to us that the company has debt. Quite frankly, we believe the record is far from up to par, although it could improve over time. However, it doesn’t help that he spent $ 97 million in cash in the past year. Suffice it to say, then, that we consider the stock to be very risky. When analyzing debt levels, the balance sheet is the obvious starting point. But at the end of the day, every business can contain risks that exist off the balance sheet. These risks can be difficult to spot. Every business has them, and we’ve spotted 3 warning signs for Liberty Braves Group you should know.
If you are interested in investing in companies that can generate profits without the burden of debt, check out this page. free list of growing companies that have net cash on the balance sheet.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares 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.
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