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. Importantly, Cogent Communications Holdings, Inc. (NASDAQ:CCOI) does carry debt. But the real question is whether this debt is making the company risky.
What Risk Does Debt Bring?
Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
What Is Cogent Communications Holdings's Net Debt?
As you can see below, at the end of June 2024, Cogent Communications Holdings had US$1.44b of debt, up from US$996.4m a year ago. Click the image for more detail. However, it also had US$384.4m in cash, and so its net debt is US$1.05b.
NasdaqGS:CCOI Debt to Equity History August 10th 2024
How Strong Is Cogent Communications Holdings' Balance Sheet?
Zooming in on the latest balance sheet data, we can see that Cogent Communications Holdings had liabilities of US$313.0m due within 12 months and liabilities of US$2.62b due beyond that. Offsetting this, it had US$384.4m in cash and US$195.5m in receivables that were due within 12 months. So it has liabilities totalling US$2.35b more than its cash and near-term receivables, combined.
This is a mountain of leverage relative to its market capitalization of US$3.26b. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Cogent Communications Holdings'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.
In the last year Cogent Communications Holdings wasn't profitable at an EBIT level, but managed to grow its revenue by 52%, to US$1.0b. Shareholders probably have their fingers crossed that it can grow its way to profits.
Caveat Emptor
Despite the top line growth, Cogent Communications Holdings still had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost US$190m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$263m of cash over the last year. So suffice it to say we consider the stock very risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 6 warning signs for Cogent Communications Holdings (4 shouldn't be ignored) you should be aware of.
When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
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ウォーレン・バフェットは有名に「変動はリスクと同意語とは言えない。」と言いました。企業がどれだけリスクを負っているのかを考えるとき、債務の利用に注目することが常です。というのも過剰な借り入れは破綻につながるからです。重要なのは、Cogent Communications Holdings, Inc. (NASDAQ:CCOI)が借金を抱えていることです。しかし、この債務が企業にリスクをもたらしているかどうかが問題です。
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。
Zooming in on the latest balance sheet data, we can see that Cogent Communications Holdings had liabilities of US$313.0m due within 12 months and liabilities of US$2.62b due beyond that. Offsetting this, it had US$384.4m in cash and US$195.5m in receivables that were due within 12 months. So it has liabilities totalling US$2.35b more than its cash and near-term receivables, combined. 
最新の貸借対照表を詳しく見ると、Cogent Communications Holdingsは12ヵ月以内に返済しなければならない負債が3,130万ドル、それ以上の負債が262億ドルあります。これを相殺するには、現金が3,844万ドル、12ヵ月以内に回収しなければならない債権が1,955万ドルあります。従って、現在の現金や短期債権を考えても負債は23.5億ドル超です。これは、時期尚早に財務基盤を強化しなければならなくなった場合、株主の希薄化リスクが高いことを示しています。負債について分析する際には、貸借対照表に注目すべきですが、企業が健全な財務基盤を維持するためには、何よりも将来の収益が重要です。将来にフォーカスした場合、アナリストの利益予想を示した無料レポートをチェックすることができます。 