We Think Haidemenos Integrated Printing Services (ATH:HAIDE) Has A Fair Chunk Of Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Haidemenos Integrated Printing Services S.A. (ATH:HAIDE) makes use of debt. But is this debt a concern to shareholders?

When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

View our latest analysis for Haidemenos Integrated Printing Services

What Is Haidemenos Integrated Printing Services's Debt?

You can click the graphic below for the historical numbers, but it shows that Haidemenos Integrated Printing Services had €8.08m of debt in December 2023, down from €10.9m, one year before. However, it does have €2.03m in cash offsetting this, leading to net debt of about €6.05m.

A Look At Haidemenos Integrated Printing Services' Liabilities

Zooming in on the latest balance sheet data, we can see that Haidemenos Integrated Printing Services had liabilities of €8.18m due within 12 months and liabilities of €3.11m due beyond that. Offsetting this, it had €2.03m in cash and €4.93m in receivables that were due within 12 months. So it has liabilities totalling €4.34m more than its cash and near-term receivables, combined.

This is a mountain of leverage relative to its market capitalization of €5.63m. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Haidemenos Integrated Printing Services will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

In the last year Haidemenos Integrated Printing Services had a loss before interest and tax, and actually shrunk its revenue by 4.1%, to €17m. We would much prefer see growth.

Caveat Emptor

Importantly, Haidemenos Integrated Printing Services had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable €750k 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. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of €1.3m into a profit. So in short it's a really risky stock. 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. These risks can be hard to spot. Every company has them, and we've spotted 2 warning signs for Haidemenos Integrated Printing Services you should know about.

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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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.