Is NewMarket (NYSE:NEU) A Risky Investment?
Is NewMarket (NYSE:NEU) A Risky Investment?
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.' 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. Importantly, NewMarket Corporation (NYSE:NEU) does carry debt. But is this debt a concern to shareholders?
傳說中的基金經理李璐(Charlie Munger支持)曾說:“最大的投資風險不是價格的波動,而是您是否會遭受永久性資本損失。” 當我們考慮一家公司的風險時,我們總是喜歡看看它的債務使用情況,因爲債務超載可能會導致破產。重要的是,NewMarket Corporation (NYSE:NEU)確實有負債。但是這個債務對股東是不是一個問題呢?
What Risk Does Debt Bring?
債務帶來了什麼風險?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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 step when considering a company's debt levels is to consider its cash and debt together.
負債幫助企業直到企業遇到還款困難,或者是靠新資本或自由現金流償還。最壞的情況是,如果一家公司不能償還債權人,那麼公司將破產。但是,更常見(但仍然昂貴)的情況是,一家公司必須在股價便宜的情況下稀釋股東,以控制負債。然而,通過替代稀釋,債務可以成爲需要高回報率的增長資本的企業的一種非常好的工具。考慮公司的債務水平的第一步是考慮其現金和債務總額。
What Is NewMarket's Net Debt?
NewMarket的淨債務是多少?
As you can see below, at the end of March 2024, NewMarket had US$1.28b of debt, up from US$958.0m a year ago. Click the image for more detail. However, it also had US$117.1m in cash, and so its net debt is US$1.16b.
正如下圖所示,在2024年3月底,NewMarket的債務總額爲12.8億美元,比一年前的9.58億美元增加。然而,它還持有1.171億美元的現金,因此其淨債務爲11.6億美元。
![debt-equity-history-analysis](https://usnewsfile.moomoo.com/public/MM-PersistNewsContentImage/7781/20240611/0-0fe3e248f405589c9437e371edb8c50a-0-94fe733c268af9b0218958150e80bb95.png/big)
A Look At NewMarket's Liabilities
查看NewMarket的負債情況
According to the last reported balance sheet, NewMarket had liabilities of US$390.8m due within 12 months, and liabilities of US$1.61b due beyond 12 months. Offsetting this, it had US$117.1m in cash and US$464.7m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$1.42b.
根據最後報告的資產負債表,NewMarket有3.908億美元的負債到期時間在12個月內,有16.1億美元的負債到期時間在12個月以後。相對而言,它擁有1.171億美元的現金和4.647億美元的應收賬款,應收賬款在12個月內到期。因此,它的負債超過其現金和(短期)應收款項的總和1.42億美元。
This deficit isn't so bad because NewMarket is worth US$5.10b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk.
這個赤字不是很糟糕,因爲NewMarket價值51億美元,因此如果需要的話,可能可以籌集足夠的資本來支撐其資產負債表。但我們肯定要留意其債務會帶來過多的風險的跡象。
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). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.
Service Corporation International的債務是其EBITDA的3.5倍,而其EBIT可覆蓋其利息開支的3.7倍。綜合考慮,雖然我們不希望看到債務水平上升,但我們認爲它可以應對當前的槓桿。好消息是,Service Corporation International在過去12個月中將其EBIT提高了2.9%,從而逐漸降低了其相對於收益的債務水平。毫無疑問,我們從資產負債表中獲得了有關債務的大部分內容。但是,相對於資產負債表,更重要的是未來收益,這將決定Service Corporation International維持健康資產負債表的能力。如果您關注未來,您可以查看此免費報告,其中有分析師的利潤預測。
We'd say that NewMarket's moderate net debt to EBITDA ratio ( being 1.9), indicates prudence when it comes to debt. And its commanding EBIT of 12.7 times its interest expense, implies the debt load is as light as a peacock feather. We note that NewMarket grew its EBIT by 24% in the last year, and that should make it easier to pay down debt, going forward. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since NewMarket will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.
我們認爲NewMarket的中等淨債務與息稅前利潤比率(爲1.9),表明了其在處理債務時的謹慎。其統治的息稅前利潤爲12.7倍,說明它的債務負擔輕盈如孔雀的羽毛。我們注意到,NewMarket去年的息稅前利潤增長了24%,這應該會使其以後更容易償還債務。無疑,在分析債務時,資產負債表是一個明顯的關注點。但是,您不能將債務視爲孤立存在;因爲NewMarket將需要賺取利潤來償還債務。因此,在考慮債務時,絕對值得看看收益趨勢。單擊此處以獲得互動快照。
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. During the last three years, NewMarket produced sturdy free cash flow equating to 58% of its EBIT, about what we'd expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.
最後,企業需要自由現金流來償還債務;會計利潤並不能勝任。因此,合乎邏輯的步驟是查看與實際自由現金流匹配的息稅前利潤比例。在過去的三年中,NewMarket產生了穩健的自由現金流,相當於其息稅前利潤的58%,與我們的預期大致相當。這種自由現金流使公司在適當時候償還債務處於良好的位置。
Our View
我們的觀點
The good news is that NewMarket's demonstrated ability to cover its interest expense with its EBIT delights us like a fluffy puppy does a toddler. And that's just the beginning of the good news since its EBIT growth rate is also very heartening. Taking all this data into account, it seems to us that NewMarket takes a pretty sensible approach to debt. While that brings some risk, it can also enhance returns for shareholders. 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. To that end, you should be aware of the 1 warning sign we've spotted with NewMarket .
好消息是,NewMarket已經表現出通過EBIt支付利息的能力,這使我們像一隻蓬鬆的小狗讓幼兒感到愉悅。這只是好消息的開始,因爲它的EBIt增長率也非常令人欣慰。綜合考慮所有這些數據,我們認爲NewMarket在債務方面採取了相當明智的方法。儘管帶來了一些風險,但也可以增強股東的回報。在分析債務水平時,資產負債表是明顯的起點。但是最終,每個公司都可能存在超出資產負債表的風險。爲此,您應該意識到我們發現了NewMarket的1個警告信號。
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
如果您有興趣投資能夠在不負債的情況下增長利潤的企業,請查看這份免費列表,其中列出了在資產負債表上擁有淨現金的成長型企業。
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