Rotten Tomato Stocks
No Result
View All Result
  • News
    Warner Bros. Discovery stock slammed after earnings debut

    Warner Bros. Discovery stock slammed after earnings debut

    BMW shares drop after flagging second half challenges

    BMW shares drop after flagging second half challenges

    Eurozone Retail Sales Fell in June Due to Higher Prices

    Eurozone Retail Sales Fell in June Due to Higher Prices

    Credit Suisse shares dive toward record low after credit downgrades

    Credit Suisse shares dive toward record low after credit downgrades

  • NYSE
    Twilio stock declines as weak outlook follows a quarterly beat

    Twilio stock declines as weak outlook follows a quarterly beat

    Block stock drops after earnings, as Square’s parent company swings to a loss

    Block stock drops after earnings, as Square’s parent company swings to a loss

    Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade

    Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade

    Fastly stock declines following outlook, new CEO

    Fastly stock declines following outlook, new CEO

  • NASDAQ
    Beyond Meat Announces Layoffs After Lower Q2 Sales

    Beyond Meat Announces Layoffs After Lower Q2 Sales

    Crocs stock dips after earnings as company cuts forecast

    Crocs stock dips after earnings as company cuts forecast

    Ultragenyx Pharmaceutical (NASDAQ:RARE) Shares Down 5.8% Following Analyst Downgrade

    Ultragenyx Pharmaceutical (NASDAQ:RARE) Shares Down 5.8% Following Analyst Downgrade

    Airbnb stock falls sharply despite earnings beat, plan to repurchase $2 billion in stock

    Airbnb stock falls sharply despite earnings beat, plan to repurchase $2 billion in stock

  • OTC
    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    Corus Entertainment 4Q Profit Falls

    Corus Entertainment 4Q Profit Falls

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

  • TSX
    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    Bitcoin Is Falling: Should You Buy the Dip?

    Bitcoin Is Falling: Should You Buy the Dip?

    CN Rail Stock Is So Undervalued That it’s Absurd

    CN Rail Stock Is So Undervalued That it’s Absurd

  • News
    Warner Bros. Discovery stock slammed after earnings debut

    Warner Bros. Discovery stock slammed after earnings debut

    BMW shares drop after flagging second half challenges

    BMW shares drop after flagging second half challenges

    Eurozone Retail Sales Fell in June Due to Higher Prices

    Eurozone Retail Sales Fell in June Due to Higher Prices

    Credit Suisse shares dive toward record low after credit downgrades

    Credit Suisse shares dive toward record low after credit downgrades

  • NYSE
    Twilio stock declines as weak outlook follows a quarterly beat

    Twilio stock declines as weak outlook follows a quarterly beat

    Block stock drops after earnings, as Square’s parent company swings to a loss

    Block stock drops after earnings, as Square’s parent company swings to a loss

    Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade

    Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade

    Fastly stock declines following outlook, new CEO

    Fastly stock declines following outlook, new CEO

  • NASDAQ
    Beyond Meat Announces Layoffs After Lower Q2 Sales

    Beyond Meat Announces Layoffs After Lower Q2 Sales

    Crocs stock dips after earnings as company cuts forecast

    Crocs stock dips after earnings as company cuts forecast

    Ultragenyx Pharmaceutical (NASDAQ:RARE) Shares Down 5.8% Following Analyst Downgrade

    Ultragenyx Pharmaceutical (NASDAQ:RARE) Shares Down 5.8% Following Analyst Downgrade

    Airbnb stock falls sharply despite earnings beat, plan to repurchase $2 billion in stock

    Airbnb stock falls sharply despite earnings beat, plan to repurchase $2 billion in stock

  • OTC
    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    China Eastern Airlines 3Q Loss Widens on Low Travel Demand

    Corus Entertainment 4Q Profit Falls

    Corus Entertainment 4Q Profit Falls

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Nintendo Co. Ltd. ADR falls Monday, still outperforms market

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

    Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

  • TSX
    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

    Bitcoin Is Falling: Should You Buy the Dip?

    Bitcoin Is Falling: Should You Buy the Dip?

    CN Rail Stock Is So Undervalued That it’s Absurd

    CN Rail Stock Is So Undervalued That it’s Absurd

No Result
View All Result
Rotten Tomato Stocks
No Result
View All Result

Is Box (NYSE:BOX) Using Debt In A Risky Way?

avatar by Editor
January 20, 2020
0
Is Box (NYSE:BOX) Using Debt In A Risky Way?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that ‘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 can see that Box, Inc. (NYSE:BOX) does use debt in its business. But should shareholders be worried about its use of debt?

When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can’t fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. 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 Box’s Debt?

The image below, which you can click on for greater detail, shows that at October 2019 Box had debt of US$40.0m, up from US$40.0 in one year. But on the other hand it also has US$200.9m in cash, leading to a US$160.9m net cash position.

NYSE:BOX Historical Debt, January 19th 2020
NYSE:BOX Historical Debt, January 19th 2020

A Look At Box’s Liabilities

Zooming in on the latest balance sheet data, we can see that Box had liabilities of US$467.5m due within 12 months and liabilities of US$355.6m due beyond that. Offsetting this, it had US$200.9m in cash and US$108.4m in receivables that were due within 12 months. So its liabilities total US$513.9m more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Box has a market capitalization of US$2.43b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. Despite its noteworthy liabilities, Box boasts net cash, so it’s fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Box’s ability to maintain a healthy balance sheet going forward.

In the last year Box wasn’t profitable at an EBIT level, but managed to grow its revenue by 16%, to US$676m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Box?

Although Box had negative earnings before interest and tax (EBIT) over the last twelve months, it generated positive free cash flow of US$47m. So taking that on face value, and considering the net cash situation, we don’t think that the stock is too risky in the near term. Until we see some positive EBIT, we’re a bit cautious of the stock, not least because of the rather modest revenue growth. 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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Box , and understanding them should be part of your investment process.

Related Posts

Twilio stock declines as weak outlook follows a quarterly beat
NYSE

Twilio stock declines as weak outlook follows a quarterly beat

August 4, 2022
Block stock drops after earnings, as Square’s parent company swings to a loss
NYSE

Block stock drops after earnings, as Square’s parent company swings to a loss

August 4, 2022
Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade
NYSE

Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade

August 4, 2022
Fastly stock declines following outlook, new CEO
NYSE

Fastly stock declines following outlook, new CEO

August 3, 2022
Load More
Next Post
Would a Warren Presidency Stop the Stock Market?

Would a Warren Presidency Stop the Stock Market?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

POPULAR NEWS

CNH Industrial (NYSE:CNHI) Use Of Debt Could Be Considered Risky

CNH Industrial (NYSE:CNHI) Use Of Debt Could Be Considered Risky

April 14, 2021
10 Warning Signs That Should Tell You “This Stock is in Trouble”

10 Warning Signs That Should Tell You “This Stock is in Trouble”

November 11, 2019
Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

Ocado Group PLC Revenue of Ocado Retail in Q3 Fell 10.6%

September 14, 2021
CN Rail Stock Is So Undervalued That it’s Absurd

CN Rail Stock Is So Undervalued That it’s Absurd

May 2, 2021
US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

US Seeks to Fine Air Canada $25.5 Million Over Slow Refunds

June 17, 2021

EDITOR'S PICK

Advanced Emissions Solutions (NASDAQ:ADES) Has Debt But No Earnings; Should You Worry?

Advanced Emissions Solutions (NASDAQ:ADES) Has Debt But No Earnings; Should You Worry?

July 27, 2021
Is Albany International (NYSE:AIN) A Risky Investment?

Is Albany International (NYSE:AIN) A Risky Investment?

February 3, 2022
Vertex Pharmaceuticals Inc. stock falls Wednesday, underperforms market

Vertex Pharmaceuticals Inc. stock falls Wednesday, underperforms market

August 12, 2021
Playtika 3Q Earnings Decline Despite Higher Sales

Playtika 3Q Earnings Decline Despite Higher Sales

November 8, 2021

Stay Updated

Get breaking news delivered straight into your inbox

Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Rotten Tomato stocks is a wholly-owned subsidiary of Grainne Capital Limited.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Rotten Tomato Stocks cover the companies and markets that are declining, failing or headed for disaster. We help investors spot the down tends and recognize when something smells rotten.

RECENT POSTS

Warner Bros. Discovery stock slammed after earnings debut

Twilio stock declines as weak outlook follows a quarterly beat

Block stock drops after earnings, as Square’s parent company swings to a loss

POPULAR POSTS

Arbor Realty Trust (NYSE:ABR) Shares Down 5.6% Following Analyst Downgrade

Beyond Meat Announces Layoffs After Lower Q2 Sales

Crocs stock dips after earnings as company cuts forecast

© Copyright 2021 RottenTomatoStocks. All Rights Reserved 

Disclaimer | Privacy Policy

No Result
View All Result
  • HOME
  • NEWS
  • NYSE
  • NASDAQ
  • OTC
  • TSX

© 2021 RottenTomatoStocks.com

error: Content is protected !!
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.