Safe & Green Holdings (NASDAQ:SGBX) Is Carrying A Fair Bit Of Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that '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 Safe & Green Holdings Corp. (NASDAQ:SGBX) makes use of debt. But the more important question is: how much risk is that debt creating?

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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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Safe & Green Holdings's Net Debt?

The image below, which you can click on for greater detail, shows that at September 2025 Safe & Green Holdings had debt of US$12.2m, up from US$6.57m in one year. On the flip side, it has US$3.02m in cash leading to net debt of about US$9.17m.

How Healthy Is Safe & Green Holdings' Balance Sheet?

We can see from the most recent balance sheet that Safe & Green Holdings had liabilities of US$24.0m falling due within a year, and liabilities of US$5.13m due beyond that. Offsetting this, it had US$3.02m in cash and US$297.1k in receivables that were due within 12 months. So its liabilities total US$25.9m more than the combination of its cash and short-term receivables.

This is a mountain of leverage relative to its market capitalization of US$34.5m. 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 Safe & Green Holdings 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.

View our latest analysis for Safe & Green Holdings

In the last year Safe & Green Holdings had a loss before interest and tax, and actually shrunk its revenue by 43%, to US$3.4m. That makes us nervous, to say the least.

Caveat Emptor

While Safe & Green Holdings's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Its EBIT loss was a whopping US$11m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$5.0m of cash over the last year. So in short it's a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. 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 6 warning signs for Safe & Green Holdings (of which 4 make us uncomfortable!) you should know about.

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.