Rotten Tomato Stocks
No Result
View All Result
  • News
    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

  • NYSE
    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    DaVita Inc. stock falls Monday, still outperforms market

    DaVita Inc. stock falls Monday, still outperforms market

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

  • NASDAQ
    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Workhorse Group Inc. stock falls Monday, underperforms market

    Workhorse Group Inc. stock falls Monday, underperforms market

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

  • 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
    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Stocks Sink as Markets Brace for Big Week With Fed, Earnings

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Low-Cost Fashion Chain H&M Reports 4th-Quarter Loss

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Dow profit and sales fall short of estimates, aims to cut $1 billion in costs in 2023

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

    Twitter Faces Lawsuits Over Unpaid Rent for US HQ, UK Office

  • NYSE
    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

    DaVita Inc. stock falls Monday, still outperforms market

    DaVita Inc. stock falls Monday, still outperforms market

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

    AmEx Profits Fall 9% as Customers Fall Behind on Payments

  • NASDAQ
    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

    Workhorse Group Inc. stock falls Monday, underperforms market

    Workhorse Group Inc. stock falls Monday, underperforms market

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

    Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

  • 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

These 4 Measures Indicate That AXT (NASDAQ:AXTI) Is Using Debt Reasonably Well

Editorial Staff by Editorial Staff
July 20, 2021
0
These 4 Measures Indicate That AXT (NASDAQ:AXTI) Is Using Debt Reasonably Well

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.’ It’s only natural to consider a company’s balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, AXT, Inc. (NASDAQ:AXTI) does carry debt. But should shareholders be worried about its use of debt?

Why Does Debt Bring Risk?

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. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Having said that, the most common situation is where a company manages its debt reasonably well – and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does AXT Carry?

The image below, which you can click on for greater detail, shows that at March 2021 AXT had debt of US$10.4m, up from US$6.07m in one year. But it also has US$61.4m in cash to offset that, meaning it has US$51.1m net cash.

debt-equity-history-analysis
NasdaqGS:AXTI Debt to Equity History July 20th 2021

How Strong Is AXT’s Balance Sheet?

The latest balance sheet data shows that AXT had liabilities of US$39.5m due within a year, and liabilities of US$3.76m falling due after that. On the other hand, it had cash of US$61.4m and US$28.4m worth of receivables due within a year. So it can boast US$46.6m more liquid assets than total liabilities.

This short term liquidity is a sign that AXT could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that AXT has more cash than debt is arguably a good indication that it can manage its debt safely.

Although AXT made a loss at the EBIT level, last year, it was also good to see that it generated US$8.1m in EBIT over the last twelve months. 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 AXT’s ability to maintain a healthy balance sheet going forward.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. While AXT has net cash on its balance sheet, it’s still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Over the last year, AXT saw substantial negative free cash flow, in total. While that may be a result of expenditure for growth, it does make the debt far more risky.

Summing up

While it is always sensible to investigate a company’s debt, in this case AXT has US$51.1m in net cash and a decent-looking balance sheet. So we are not troubled with AXT’s debt use. 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. 

Related Posts

Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading
NASDAQ

Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

January 31, 2023
Workhorse Group Inc. stock falls Monday, underperforms market
NASDAQ

Workhorse Group Inc. stock falls Monday, underperforms market

January 31, 2023
World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade
NASDAQ

World Acceptance (NASDAQ:WRLD) Shares Gap Down After Analyst Downgrade

January 31, 2023
Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly
NASDAQ

Here’s Why Qorvo (NASDAQ:QRVO) Can Manage Its Debt Responsibly

January 30, 2023
Load More
Next Post
Atmos Energy (NYSE:ATO) Takes On Some Risk With Its Use Of Debt

Atmos Energy (NYSE:ATO) Takes On Some Risk With Its Use Of Debt

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
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
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
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

EDITOR'S PICK

Record rise in mortgage debt, StatsCan reports

Record rise in mortgage debt, StatsCan reports

June 18, 2021
Is Deckers Outdoor (NYSE:DECK) A Risky Investment?

Is Deckers Outdoor (NYSE:DECK) A Risky Investment?

January 30, 2020
Is Revance Therapeutics (NASDAQ:RVNC) Using Too Much Debt?

Is Revance Therapeutics (NASDAQ:RVNC) Using Too Much Debt?

November 3, 2021
Is Southern (NYSE:SO) A Risky Investment?

Is Southern (NYSE:SO) A Risky Investment?

November 27, 2022

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

Stocks Sink as Markets Brace for Big Week With Fed, Earnings

Johnson & Johnson, Chevron share losses lead Dow’s 261-point drop

DaVita Inc. stock falls Monday, still outperforms market

POPULAR POSTS

Marcus & Millichap (NYSE:MMI) Trading Down 6.3% on Analyst Downgrade

Orchestra BioMed Down Almost 17% on Second Day of Nasdaq Trading

Workhorse Group Inc. stock falls Monday, underperforms market

© 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.