WINFARM Société anonyme (EPA:ALWF) Has Debt But No Earnings; Should You Worry?

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.' 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, WINFARM Société anonyme (EPA:ALWF) 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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

What Is WINFARM Société anonyme's Debt?

As you can see below, WINFARM Société anonyme had €29.7m of debt at June 2025, down from €33.8m a year prior. However, it also had €1.55m in cash, and so its net debt is €28.1m.

How Healthy Is WINFARM Société anonyme's Balance Sheet?

We can see from the most recent balance sheet that WINFARM Société anonyme had liabilities of €32.2m falling due within a year, and liabilities of €25.5m due beyond that. On the other hand, it had cash of €1.55m and €12.2m worth of receivables due within a year. So it has liabilities totalling €44.0m more than its cash and near-term receivables, combined.

This deficit casts a shadow over the €8.05m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, WINFARM Société anonyme would likely require a major re-capitalisation if it had to pay its creditors today. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if WINFARM Société anonyme can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for WINFARM Société anonyme

Over 12 months, WINFARM Société anonyme reported revenue of €143m, which is a gain of 4.7%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Over the last twelve months WINFARM Société anonyme produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable €2.1m at the EBIT level. Combining this information with the significant liabilities we already touched on makes us very hesitant about this stock, to say the least. That said, it is possible that the company will turn its fortunes around. But we think that is unlikely since it is low on liquid assets, and made a loss of €1.7m in the last year. So we think this stock is quite risky. We'd prefer to pass. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. To that end, you should learn about the 3 warning signs we've spotted with WINFARM Société anonyme (including 2 which are concerning) .

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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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.