MGM Resorts International (NYSE:MGM) Takes On Some Risk With Its Use Of Debt
MGM Resorts International (NYSE:MGM) Takes On Some Risk With Its Use Of Debt
Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 MGM Resorts International (NYSE:MGM) does have debt on its balance sheet. But should shareholders be worried about its use of debt?
传奇基金经理陆松利(享有查理•芒格的支持)曾说过,“最大的投资风险不是价格波动而是是否会承受永久性资本损失。”因此,看起来明智的投资方知道,通常涉及破产的债务是评估公司风险的非常重要的因素。我们注意到,美高梅国际(NYSE:MGM)在其资产负债表上确实存在债务。但是,股东应该担心它的债务使用吗?
When Is Debt A Problem?
什么时候负债才是一个问题?
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. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.
债务是帮助企业增长的工具,但如果企业无法偿还其债权人,那么它就处于他们的掌控之中。如果情况变得非常糟糕,债权人可以接管企业。然而,更频繁(但仍然昂贵)的情况是公司必须以跳楼价发行股票,永久性稀释股东,以稳固其资产负债表。当然,债务可以是企业尤其是资本重的企业的重要工具。考虑一家公司的债务水平的第一步是将其现金和债务视为一体。
What Is MGM Resorts International's Debt?
什么是美高梅国际的债务?
The image below, which you can click on for greater detail, shows that MGM Resorts International had debt of US$6.27b at the end of March 2024, a reduction from US$6.88b over a year. However, it also had US$2.72b in cash, and so its net debt is US$3.55b.
下面的图片(可单击以获得更多详细信息)显示,截至2024年3月底,美高梅国际的债务为62.7亿美元,较前一年的68.8亿美元减少。但是,它还拥有27.2亿美元的现金,所以净债务为35.5亿美元。
![big](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240727/0-00d31e9d28eac3296c256daec9ff72ce-0-350c6dc7c13d1747648fa71416111489.png/big)
How Strong Is MGM Resorts International's Balance Sheet?
美高梅国际的资产负债表有多强?
According to the last reported balance sheet, MGM Resorts International had liabilities of US$3.03b due within 12 months, and liabilities of US$35.0b due beyond 12 months. Offsetting this, it had US$2.72b in cash and US$1.02b in receivables that were due within 12 months. So its liabilities total US$34.3b more than the combination of its cash and short-term receivables.
根据最近公布的资产负债表,美高梅国际的流动负债为30.3亿美元,长期负债为350亿美元。相应地,它有27.2亿美元的现金和10.2亿美元的应收票据,在12个月内到期。因此,其负债总额超过现金和短期应收票据的总和343亿美元。
This deficit casts a shadow over the US$13.3b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. At the end of the day, MGM Resorts International would probably need a major re-capitalization if its creditors were to demand repayment.
这个缺口像一个庞然大物般笼罩着这家133亿美元的公司。毫无疑问,我们会密切关注它的资产负债表。归根到底,如果债权人要求偿还,美高梅国际可能需要进行重大资本重组。
In order to size up a company's debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
为了对公司的债务相对于其收益进行规模适应,我们计算其净债务与利息、税、折旧和摊销前收益(EBITDA)之比及其税前收益(EBIT)与利息支出之比(利息保障倍数)。因此,我们既考虑到不包括折旧和摊销费用在内的收益,又包括折旧和摊销费用的收益相对于债务。
While MGM Resorts International's low debt to EBITDA ratio of 1.4 suggests only modest use of debt, the fact that EBIT only covered the interest expense by 6.1 times last year does give us pause. So we'd recommend keeping a close eye on the impact financing costs are having on the business. Although MGM Resorts International made a loss at the EBIT level, last year, it was also good to see that it generated US$1.7b in EBIT over the last twelve months. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if MGM Resorts International can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
尽管美高梅国际低的债务/ EBITDA比率1.4表明只有适度的债务使用,但去年EBIT仅覆盖了利息费用的6.1倍,这确实让我们有所顾虑。因此,我们建议密切关注融资成本对业务的影响。尽管美高梅国际去年在EBIT水平上亏损,但能看到它在过去十二个月内获得了17亿美元的EBIT也是不错的。当您分析债务时,明显的要点是资产负债表。但是,最终业务的未来盈利能力将决定美高梅国际能否随着时间的推移加强其资产负债表。因此,如果您关注未来,您可以查看这份免费报告,显示分析师的利润预测。
Finally, a company can only pay off debt with cold hard cash, not accounting profits. So it's worth checking how much of the earnings before interest and tax (EBIT) is backed by free cash flow. During the last year, MGM Resorts International generated free cash flow amounting to a very robust 94% of its EBIT, more than we'd expect. That puts it in a very strong position to pay down debt.
最后,公司只能用冷硬的现金而不是会计利润偿还债务。因此,检查收益之前的利息和税前利润(EBIT)有多少是由自由现金流支持的也是值得的。在过去的一年里,美高梅国际产生了非常强劲的EBIT的自由现金流,相当于其EBIT的94%,超出了我们的预期。这使该公司处于非常强大的偿还债务的位置。
Our View
我们的观点
Neither MGM Resorts International's ability to handle its total liabilities nor its EBIT growth rate gave us confidence in its ability to take on more debt. But its conversion of EBIT to free cash flow tells a very different story, and suggests some resilience. When we consider all the factors discussed, it seems to us that MGM Resorts International is taking some risks with its use of debt. While that debt can boost returns, we think the company has enough leverage now. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 3 warning signs for MGM Resorts International that you should be aware of before investing here.
美高梅国际处理其总负债的能力以及其EBIT增长率都没有让我们对其承担更多债务的能力有信心。但是,从EBIT转化为自由现金流的情况则讲述了一个完全不同的故事,并表明了一定的韧性。当我们考虑所有讨论过的因素时,我们认为美高梅国际在使用债务方面面临一些风险。尽管债务可以提高回报率,但我们认为该公司现在已经具有足够的杠杆效应。在分析债务水平时,资产负债表是显而易见的起点。但是,最终,每个公司都可能存在平衡表之外的风险。例如,我们发现了3个警告标志,需要您在投资之前意识到。
At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.
总的来说,专注于没有净债务的公司往往更好。您可以访问我们的特别列表,其中包含这些公司(所有这些公司都有盈利增长的记录)。这是免费的。
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