The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says '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, uniQure N.V. (NASDAQ:QURE) does carry debt. But the more important question is: how much risk is that debt creating?
Why Does Debt Bring Risk?
Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.
How Much Debt Does uniQure Carry?
The image below, which you can click on for greater detail, shows that at March 2024 uniQure had debt of US$507.5m, up from US$103.3m in one year. But it also has US$555.7m in cash to offset that, meaning it has US$48.2m net cash.
NasdaqGS:QURE Debt to Equity History July 12th 2024
How Healthy Is uniQure's Balance Sheet?
According to the last reported balance sheet, uniQure had liabilities of US$63.5m due within 12 months, and liabilities of US$559.8m due beyond 12 months. Offsetting this, it had US$555.7m in cash and US$10.7m in receivables that were due within 12 months. So it has liabilities totalling US$56.9m more than its cash and near-term receivables, combined.
Given uniQure has a market capitalization of US$491.3m, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, uniQure boasts net cash, so it's fair to say it does not have a heavy debt load! 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 uniQure'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.
Over 12 months, uniQure made a loss at the EBIT level, and saw its revenue drop to US$19m, which is a fall of 83%. That makes us nervous, to say the least.
So How Risky Is uniQure?
We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year uniQure had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$135m of cash and made a loss of US$297m. While this does make the company a bit risky, it's important to remember it has net cash of US$48.2m. That means it could keep spending at its current rate for more than two years. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. 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. We've identified 4 warning signs with uniQure (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
NasdaqGS：QURE Debt to Equity History July 12th 2024
uniQureの財務状況はどのようになっていますか？
最後に報告された貸借対照表によると、uniQureは、12か月以内に6,350万ドルの債務を、12か月超の間に55,980万ドルの債務を負っていました。これに対して、55,570万ドルの現金と、12か月以内に支払われる1,070万ドルの未収金がありました。そのため、現金と近い将来の未収金を合わせると、その合計額よりも5,690万ドルの負債があります。uniQureの時価総額が4,9130万ドルであることを考慮すると、これらの債務が多大な脅威を posed するとは思えません。しかしながら、十分な債務があるため、株主は将来にわたって財務状況を監視し続けることが必要です。 uniQure has net cash, so it's fair to say it does not have a heavy debt load!財務状況について最も学ぶことが多いのは貸借対照表です。しかし、バランスシート以外のリスクも存在することを忘れてはなりません。このフリーレポートをチェックして、アナリストの利益予測を確認することもできます。
uniQureは、マーケットキャピタリゼーションが4,9130万ドルであるため、これらの債務が大きな脅威を posed するとは思えません。しかしながら、株主は将来にわたって財務状況を監視していく必要があるため、十分な債務があることは間違いありません。 uniQure boasts net cash, so it's fair to say it does not have a heavy debt load!財務状況について最も学ぶことが多いのは貸借対照表です。しかし、バランスシート以外のリスクも存在することを忘れてはなりません。このフリーレポートをチェックして、アナリストの利益予測を確認することもできます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会（ASIC）の管理を受けております（AFSL No. 224663）。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会（ASIC）の管理を受けております（AFSL No. 224663）。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
