Is Heartland Express (NASDAQ:HTLD) Using Too Much 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.' 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 note that Heartland Express, Inc. (NASDAQ:HTLD) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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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. 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 think about a company's use of debt, we first look at cash and debt together.

What Is Heartland Express's Debt?

The image below, which you can click on for greater detail, shows that Heartland Express had debt of US$189.5m at the end of March 2025, a reduction from US$246.3m over a year. However, because it has a cash reserve of US$23.9m, its net debt is less, at about US$165.6m.

How Healthy Is Heartland Express' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Heartland Express had liabilities of US$155.5m due within 12 months and liabilities of US$381.5m due beyond that. Offsetting these obligations, it had cash of US$23.9m as well as receivables valued at US$95.0m due within 12 months. So it has liabilities totalling US$418.1m more than its cash and near-term receivables, combined.

This deficit is considerable relative to its market capitalization of US$690.5m, so it does suggest shareholders should keep an eye on Heartland Express' use of debt. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet in a hurry. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Heartland Express's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Heartland Express

In the last year Heartland Express had a loss before interest and tax, and actually shrunk its revenue by 13%, to US$997m. We would much prefer see growth.

Caveat Emptor

Not only did Heartland Express's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). To be specific the EBIT loss came in at US$30m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. So we think its balance sheet is a little strained, though not beyond repair. We would feel better if it turned its trailing twelve month loss of US$28m into a profit. So we do think this stock is quite risky. When I consider a company to be a bit risky, I think it is responsible to check out whether insiders have been reporting any share sales. Luckily, you can click here ito see our graphic depicting Heartland Express insider transactions.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.