Does HF Sinclair (NYSE:DINO) Have A Healthy Balance Sheet?

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.' 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, HF Sinclair Corporation (NYSE:DINO) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

What Is HF Sinclair's Net Debt?

The chart below, which you can click on for greater detail, shows that HF Sinclair had US$2.71b in debt in March 2025; about the same as the year before. However, it does have US$547.0m in cash offsetting this, leading to net debt of about US$2.17b.

How Healthy Is HF Sinclair's Balance Sheet?

We can see from the most recent balance sheet that HF Sinclair had liabilities of US$2.66b falling due within a year, and liabilities of US$4.63b due beyond that. Offsetting these obligations, it had cash of US$547.0m as well as receivables valued at US$1.38b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$5.36b.

This is a mountain of leverage relative to its market capitalization of US$8.33b. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine HF Sinclair'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.

See our latest analysis for HF Sinclair

Over 12 months, HF Sinclair made a loss at the EBIT level, and saw its revenue drop to US$28b, which is a fall of 11%. We would much prefer see growth.

Caveat Emptor

While HF Sinclair's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. To be specific the EBIT loss came in at US$50m. 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. We would feel better if it turned its trailing twelve month loss of US$143m into a profit. So we do think this stock is quite risky. 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 HF Sinclair is showing 1 warning sign in our investment analysis , 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.