4 US companies on the Moscow Exchange, in which it is dangerous to invest Earlier, we talked about the dangers of rising interest rates for companies with excessive debt burden, and today we will compose a kind of debt load rating. We will evaluate by NetDebt / EBITDA, since it is the most common.
In this article, NetDebt and EBITDA were calculated as follows:
- NetDebt = Long Debt + Short debt - Cash and cash equivalents (cache).
- EBITDA = Operating income + Depreciation and amortization.
In the article, long debt and short debt are not necessarily something, what is designated as short-term debt and long-term debt in the financial report. This also includes senior notes, unsecured debt, real estate mortgages (mortgages) etc. In addition, some companies may include cash and equivalents and short-term investments in different report items as part of cash equivalents.. Short-term investments were added to the cache to compile the rating.
In March 2021 G. not all companies have submitted reports for 2020 fiscal year. To bring statistics "to one denominator", for "lagging" companies, depreciation and operating profit data were linearly extrapolated, however, the balance sheet (cache, debts) used in calculations without changes. Companies with extrapolated data in the table are highlighted in bold.
Due to the above assumptions, the indicators in the article may differ from data from other sources..
Is considered, the lower the NetDebt / EBITDA ratio, the better for the company. If this ratio is negative, then we have the most favorable option: there is enough money in the company's accounts, to pay off all your debts in full. However, in the table below, NetDebt / EBITDA is calculated purely technically., therefore, it is desirable to analyze the obtained value as little as possible.
For example, if you blindly follow the rule “The less NetDebt / EBITDA, the better for the company ", then American Airlines may seem like the most reliable issuer. However, detailed analysis shows, that this company poses a great danger to a potential investor: the air carrier's activities are currently operationally unprofitable, and there is not enough money in the accounts even to pay off short-term liabilities. For convenience of perception, such "incidents" are highlighted in the column "NetDebt/EBITDA" in red. At the same time, with this example, we do not seek to discredit the NetDebt / EBITDA indicator.. Also, for convenience, in the columns "Operating profit" and "EBITDA" negative values are highlighted in red, and in "NetDebt" and "NetDebt / EBITDA" - green.
Rice. 1. Summary of debt indicators of some American companies. A source: EDGARRis. 1. Summary of debt indicators of some American companies. A source: EDGAR
At first glance, it may seem, that Disney is in greatest danger, KraftHeinz и BMS. However, this is not quite true. The companies mentioned are really heavily leveraged, but at the same time, the volume of the cache on their accounts is multiples of the size of short-term debt. Quite possibly, that low operating margins among the leaders of the rating are temporary. In particular, Bristol Myers Squibb's operating losses are related to the acquisition of MioKardia.
If we analyze the ratio of cash on accounts with the size of short-term debt, then the following companies will be at risk:
- Pfizer,
- NextEra Energy,
- Exxon Mobil,
- American Airlines.
Given the scale of the business of these four organizations, unlikely, that one of them will go bankrupt. However, financial difficulties can affect dividends and share price dynamics..
