We Think Gilat Telecom Global (TLV:GLTL) Can Stay On Top Of Its Debt

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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. As with many other companies Gilat Telecom Global Ltd (TLV:GLTL) makes use of debt. But should shareholders be worried about its use of debt?

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

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. 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.

What Is Gilat Telecom Global's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of September 2025 Gilat Telecom Global had US$15.9m of debt, an increase on US$7.66m, over one year. But on the other hand it also has US$23.2m in cash, leading to a US$7.31m net cash position.

How Strong Is Gilat Telecom Global's Balance Sheet?

According to the last reported balance sheet, Gilat Telecom Global had liabilities of US$53.9m due within 12 months, and liabilities of US$7.06m due beyond 12 months. On the other hand, it had cash of US$23.2m and US$23.0m worth of receivables due within a year. So it has liabilities totalling US$14.8m more than its cash and near-term receivables, combined.

This deficit isn't so bad because Gilat Telecom Global is worth US$33.0m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. Despite its noteworthy liabilities, Gilat Telecom Global boasts net cash, so it's fair to say it does not have a heavy debt load!

View our latest analysis for Gilat Telecom Global

Importantly, Gilat Telecom Global grew its EBIT by 69% over the last twelve months, and that growth will make it easier to handle its debt. When analysing debt levels, the balance sheet is the obvious place to start. But it is Gilat Telecom Global's earnings that will influence how the balance sheet holds up in the future. 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.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. Gilat Telecom Global may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Happily for any shareholders, Gilat Telecom Global actually produced more free cash flow than EBIT over the last three years. That sort of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Summing Up

While Gilat Telecom Global does have more liabilities than liquid assets, it also has net cash of US$7.31m. And it impressed us with free cash flow of US$16m, being 195% of its EBIT. So we are not troubled with Gilat Telecom Global's debt use. 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. Be aware that Gilat Telecom Global is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.