Stock Analysis

NICE (TLV:NICE) Could Easily Take On More Debt

TASE:NICE
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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.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, NICE Ltd. (TLV:NICE) does carry debt. But is this debt a concern to shareholders?

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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. If things get really bad, the lenders can take control of the business. 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.

How Much Debt Does NICE Carry?

The chart below, which you can click on for greater detail, shows that NICE had US$459.2m in debt in March 2025; about the same as the year before. However, its balance sheet shows it holds US$1.61b in cash, so it actually has US$1.15b net cash.

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TASE:NICE Debt to Equity History July 5th 2025

How Strong Is NICE's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that NICE had liabilities of US$1.54b due within 12 months and liabilities of US$188.5m due beyond that. Offsetting these obligations, it had cash of US$1.61b as well as receivables valued at US$643.2m due within 12 months. So it can boast US$521.9m more liquid assets than total liabilities.

This surplus suggests that NICE has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, NICE boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for NICE

Also positive, NICE grew its EBIT by 25% in the last year, and that should make it easier to pay down debt, going forward. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine NICE's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. While NICE 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 three years, NICE actually produced more free cash flow than EBIT. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Summing Up

While it is always sensible to investigate a company's debt, in this case NICE has US$1.15b in net cash and a decent-looking balance sheet. And it impressed us with free cash flow of US$769m, being 122% of its EBIT. So we don't think NICE's use of debt is risky. Above most other metrics, we think its important to track how fast earnings per share is growing, if at all. If you've also come to that realization, you're in luck, because today you can view this interactive graph of NICE's earnings per share history for free.

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.

Valuation is complex, but we're here to simplify it.

Discover if NICE might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.