Does Elecnor (BME:ENO) Have A Healthy Balance Sheet?

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, Elecnor, S.A. (BME:ENO) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

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. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Elecnor's Net Debt?

As you can see below, Elecnor had €353.8m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. But on the other hand it also has €431.8m in cash, leading to a €78.0m net cash position.

How Strong Is Elecnor's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Elecnor had liabilities of €2.27b due within 12 months and liabilities of €328.2m due beyond that. Offsetting these obligations, it had cash of €431.8m as well as receivables valued at €1.72b due within 12 months. So its liabilities total €443.8m more than the combination of its cash and short-term receivables.

Elecnor has a market capitalization of €2.20b, so it could very likely raise cash to ameliorate its balance sheet, if the need arose. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. Despite its noteworthy liabilities, Elecnor 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 ultimately the future profitability of the business will decide if Elecnor can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for Elecnor

In the last year Elecnor wasn't profitable at an EBIT level, but managed to grow its revenue by 7.8%, to €4.1b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Elecnor?

Although Elecnor had an earnings before interest and tax (EBIT) loss over the last twelve months, it generated positive free cash flow of €76m. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 1 warning sign for Elecnor you should be aware of.

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.

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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.