Atlanta Braves Holdings (NASDAQ:BATR.K) Is Making Moderate Use Of Debt

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that Atlanta Braves Holdings, Inc. (NASDAQ:BATR.K) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. 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 Atlanta Braves Holdings's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of December 2024 Atlanta Braves Holdings had US$617.1m of debt, an increase on US$569.3m, over one year. However, it does have US$110.1m in cash offsetting this, leading to net debt of about US$507.0m.

How Healthy Is Atlanta Braves Holdings' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Atlanta Braves Holdings had liabilities of US$286.7m due within 12 months and liabilities of US$701.0m due beyond that. Offsetting these obligations, it had cash of US$110.1m as well as receivables valued at US$50.0m due within 12 months. So it has liabilities totalling US$827.5m more than its cash and near-term receivables, combined.

While this might seem like a lot, it is not so bad since Atlanta Braves Holdings has a market capitalization of US$2.59b, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off debt. 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 Atlanta Braves Holdings'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 Atlanta Braves Holdings

In the last year Atlanta Braves Holdings wasn't profitable at an EBIT level, but managed to grow its revenue by 3.4%, to US$663m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, Atlanta Braves Holdings had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost US$38m at the EBIT level. 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$69m of cash over the last year. So suffice it to say we do consider the stock to be risky. 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. For instance, we've identified 1 warning sign for Atlanta Braves Holdings that you should be aware of.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.