Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that Coeur Mining, Inc. (NYSE:CDE) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?
When Is Debt Dangerous?
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. If things get really bad, the lenders can take control of the business. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
View our latest analysis for Coeur Mining
What Is Coeur Mining's Net Debt?
As you can see below, at the end of June 2022, Coeur Mining had US$483.7m of debt, up from US$367.8m a year ago. Click the image for more detail. However, it also had US$161.7m in cash, and so its net debt is US$322.0m.
NYSE:CDE Debt to Equity History September 27th 2022
How Healthy Is Coeur Mining's Balance Sheet?
Zooming in on the latest balance sheet data, we can see that Coeur Mining had liabilities of US$241.1m due within 12 months and liabilities of US$762.1m due beyond that. On the other hand, it had cash of US$161.7m and US$32.5m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$809.0m.
Given this deficit is actually higher than the company's market capitalization of US$758.3m, we think shareholders really should watch Coeur Mining's debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution.
We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). The advantage of this approach is that we take into account both the absolute quantum of debt (with net debt to EBITDA) and the actual interest expenses associated with that debt (with its interest cover ratio).
While Coeur Mining has a quite reasonable net debt to EBITDA multiple of 2.1, its interest cover seems weak, at 1.3. In large part that's it has so much depreciation and amortisation. These charges may be non-cash, so they could be excluded when it comes to paying down debt. But the accounting charges are there for a reason -- some assets are seen to be losing value. Either way there's no doubt the stock is using meaningful leverage. Shareholders should be aware that Coeur Mining's EBIT was down 86% last year. If that decline continues then paying off debt will be harder than selling foie gras at a vegan convention. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Coeur Mining'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.
Finally, a company can only pay off debt with cold hard cash, not accounting profits. So we always check how much of that EBIT is translated into free cash flow. Over the last two years, Coeur Mining saw substantial negative free cash flow, in total. While investors are no doubt expecting a reversal of that situation in due course, it clearly does mean its use of debt is more risky.
Our View
To be frank both Coeur Mining's conversion of EBIT to free cash flow and its track record of (not) growing its EBIT make us rather uncomfortable with its debt levels. Having said that, its ability handle its debt, based on its EBITDA, isn't such a worry. After considering the datapoints discussed, we think Coeur Mining has too much debt. That sort of riskiness is ok for some, but it certainly doesn't float our boat. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Coeur Mining is showing 3 warning signs in our investment analysis , and 1 of those is significant...
Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.
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.
巴菲特(Warren Buffett)曾说过一句名言:波动性远非风险的代名词。当我们考虑一家公司的风险有多大时,我们总是喜欢看它对债务的使用,因为债务过重可能导致破产。我们注意到Coeur矿业公司(纽约证券交易所代码:CDE)的资产负债表上确实有债务。但更重要的问题是:这笔债务造成了多大的风险?
债务在什么时候是危险的?
债务是帮助企业发展的一种工具,但如果一家企业无法偿还贷款人的债务,那么它就只能听从贷款人的摆布。如果情况真的变得很糟糕,贷款人可以控制业务。然而,更常见(但代价仍然高昂)的情况是,一家公司必须以极低的价格发行股票,永久性地稀释股东的股份,只是为了支撑其资产负债表。然而,通过取代稀释,对于需要资本投资于高回报率增长的企业来说,债务可以成为一个非常好的工具。当考虑一家企业使用了多少债务时,首先要做的是把现金和债务放在一起看。
查看我们对Coeur Mining的最新分析
Coeur矿业的净债务是多少?
如下所示,截至2022年6月底,Coeur Mining的债务为4.837亿美元,高于一年前的3.678亿美元。单击图像了解更多详细信息。然而,它也有1.617亿美元的现金,因此它的净债务为3.22亿美元。
纽约证券交易所:CDE债转股历史2022年9月27日
Coeur矿业的资产负债表有多健康?
放大最新的资产负债表数据,我们可以看到,Coeur Mining有2.411亿美元的负债在12个月内到期,超过12个月的负债有7.621亿美元到期。另一方面,它有1.617亿美元的现金和价值3250万美元的应收账款在一年内到期。因此,它的负债比现金和(近期)应收账款之和高出8.09亿美元。
鉴于这一赤字实际上高于该公司7.583亿美元的市值,我们认为股东们真的应该关注Coeur Mining的债务水平,就像父母第一次看孩子骑车一样。在该公司不得不迅速清理其资产负债表的情况下,股东似乎可能会遭受广泛的稀释。
我们使用两个主要比率来告知我们债务相对于收益的水平。第一个是净债务除以利息、税项、折旧和摊销前收益(EBITDA),第二个是其息税前收益(EBIT)覆盖其利息支出(或简称利息覆盖)的多少倍。这种方法的优点是,我们既考虑了债务的绝对数量(净债务与EBITDA之比),也考虑了与债务相关的实际利息支出(及其利息覆盖率)。
尽管Coeur Mining的净债务与EBITDA之比相当合理,为2.1倍,但其利息覆盖似乎较弱,为1.3倍。在很大程度上,这是因为它有如此多的折旧和摊销。这些费用可能是非现金的,因此在偿还债务时可能会被排除在外。但会计费用的存在是有原因的--一些资产被认为正在贬值。无论哪种方式,毫无疑问,该股正在使用有意义的杠杆。股东们应该知道,Coeur Mining的息税前利润去年下降了86%。如果这种下降趋势继续下去,那么偿还债务将比在素食大会上出售鹅肝酱更难。毫无疑问,我们从资产负债表中了解到的债务最多。但最重要的是,未来的收益将决定Coeur矿业未来保持健康资产负债表的能力。所以,如果你关注未来,你可以看看这个免费显示分析师利润预测的报告。
最后,一家公司只能用冷硬现金偿还债务,而不是会计利润。因此,我们总是检查EBIT中有多少转化为自由现金流。在过去的两年里,Coeur矿业的自由现金流总体上为负。尽管投资者无疑预计这种情况会在适当的时候逆转,但这显然意味着它使用债务的风险更大。
我们的观点
坦率地说,Coeur Mining将息税前利润转换为自由现金流,以及其息税前利润(不)增长的记录,都让我们对其债务水平感到相当不安。话虽如此,根据其EBITDA,它处理债务的能力并不是那么令人担忧。在考虑了讨论的数据点后,我们认为Coeur Mining负债太多。这种风险对一些人来说是可以接受的,但肯定不会让我们的船漂浮起来。当你分析债务时,资产负债表显然是你关注的领域。但归根结底,每家公司都可能包含存在于资产负债表之外的风险。请注意,Coeur Mining正在展示我们的投资分析中的3个警告信号,其中一条意义重大……
当然,如果你是那种喜欢在没有债务负担的情况下购买股票的投资者,那么不要犹豫,今天就来看看我们的净现金成长型股票独家名单。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。