Is Stabilis Solutions (NASDAQ:SLNG) Weighed On By Its Debt Load?

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. We note that Stabilis Solutions, Inc. (NASDAQ:SLNG) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Stabilis Solutions's Net Debt?

As you can see below, Stabilis Solutions had US$7.63m of debt at June 2025, down from US$8.59m a year prior. However, it does have US$12.3m in cash offsetting this, leading to net cash of US$4.69m.

How Healthy Is Stabilis Solutions' Balance Sheet?

According to the last reported balance sheet, Stabilis Solutions had liabilities of US$11.3m due within 12 months, and liabilities of US$6.42m due beyond 12 months. On the other hand, it had cash of US$12.3m and US$4.61m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$829.0k.

This state of affairs indicates that Stabilis Solutions' balance sheet looks quite solid, as its total liabilities are just about equal to its liquid assets. So it's very unlikely that the US$83.3m company is short on cash, but still worth keeping an eye on the balance sheet. Despite its noteworthy liabilities, Stabilis Solutions boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Stabilis Solutions's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for Stabilis Solutions

Over 12 months, Stabilis Solutions made a loss at the EBIT level, and saw its revenue drop to US$70m, which is a fall of 3.0%. We would much prefer see growth.

So How Risky Is Stabilis Solutions?

While Stabilis Solutions lost money on an earnings before interest and tax (EBIT) level, it actually booked a paper profit of US$892k. So when you consider it has net cash, along with the statutory profit, the stock probably isn't as risky as it might seem, at least in the short term. With revenue growth uninspiring, we'd really need to see some positive EBIT before mustering much enthusiasm for this business. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. Be aware that Stabilis Solutions is showing 4 warning signs in our investment analysis , and 1 of those is a bit 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.