Liabilities Breakdown
390.8 M
Current Liabilities
497.7 M
Long-Term Liabilities
| Total Liabilities | 888.56 Million | |
| Current Liabilities | 390.84 Million | |
| Long-Term Liabilities | 497.72 Million | |
| Tax Liabilities | 5.55 Million |
Should I hold on to my Helen (USA Stocks:HELE) position?
 | By Vlad Skutelnik | Macroaxis Story |
Investing in Helen of Troy (NASDAQ: HELE), a key player in the Household & Personal Products industry, presents a unique opportunity from a leverage viewpoint. The company's significant gross profit of 899.4M is a strong indicator of its financial health, providing a cushion against potential downturns. However, investors should also consider the company's high capital expenditures of 174.9M, which could impact the firm's ability to generate positive cash flow, currently at 33.4M. The Coefficient of Variation at 4.1K suggests a high degree of risk relative to the return, indicating that the company's stock price is highly volatile. Therefore, while Helen of Troy's financials show potential, investors should carefully consider the associated risks before retaining their investment.
Main Takeaways
Helen of Troy currently holds liabilities amounting to $977.08 million, with a Debt to Equity (D/E) ratio of 0.87. This ratio is roughly average when compared to similar companies. The company's current ratio stands at 2.08, indicating that it possesses sufficient liquidity to meet its financial obligations as they come due. While debt can aid Helen of Troy until it encounters difficulties in paying it off, either with new capital or with free cash flow, there's a risk that shareholders could end up with nothing if the company fails to meet its legal obligations to repay its debt. However, a more common scenario is for companies like Helen of Troy to issue additional shares at discounted prices, thereby diluting the holdings of existing shareholders. In such instances, debt can be a more effective tool for Helen of Troy to invest in growth at high rates of return. When evaluating Helen of Troy's use of debt, it's important to consider it in conjunction with cash and equity.Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.
Reviewed by Raphi Shpitalnik
Every cloud has a silver lining, and this could be the case for investors considering Helen of Troy (NASDAQ: HELE). As a key player in the Consumer Defensive sector, specifically within the Household Durables category, Helen of Troy has demonstrated resilience despite facing significant financial challenges. The company ended the period with a cash flow of $29.1 million, which is a positive sign. However, it's important to note that the company has a substantial amount of long-term debt, standing at $928.3 million. This is coupled with non-current liabilities totaling $1 billion, which could potentially impact the company's financial stability. On the other hand, Helen of Troy has a strong asset base, with total current assets amounting to $892 million and property, plant, and equipment valued at $351.8 million. Despite a net tangible asset loss of $131.6 million, the company managed to post a net income of $143.3 million. Investors should also consider the company's EBITDA of $284.1 million, which indicates its profitability before accounting for interest, taxes, depreciation, and amortization. However, the company has experienced a loss in net interest income, amounting to $40.8 million. In conclusion, while Helen of Troy presents some financial challenges, it also offers potential upside with a possible price increase to $113.81. As always, investors should carefully consider all aspects of the company's financial health before making a decision. Helen Of Troy is set to announce its earnings tomorrow, with the forthcoming quarterly report anticipated on January 8, 2024. Currently, Helen Of Troy's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is projected to see a significant increase, based on the company's reporting trends over the past few years. The Earnings Before Tax (EBT) for the current year is expected to grow to approximately $180.8 million, while the Market Capitalization is predicted to decline to around $3.9 billion. As some baby boomers express concern about the household durables sector, it is reasonable to consider Helen Of Troy as a potential investment option.Helen Of financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Helen Of, including all of Helen Of's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Helen Of assets, the company is considered highly leveraged. Understanding the composition and structure of overall Helen Of debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.
Understanding Helen Total Liabilities
Helen of Troy liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Helen of Troy has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Helen Of balance sheet include debt obligations and money owed to different Helen Of vendors, workers, and loan providers. Below is the chart of Helen short long-term liabilities accounts currently reported on its balance sheet. You can use Helen of Troy financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Helen Of's Liquidity
Helen Of financial leverage refers to using borrowed capital as a funding source to finance Helen of Troy ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Helen Of financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Helen Of's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Helen Of's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Helen Of's total debt and its cash.
An Additional Perspective On Helen of Troy
The modest gains experienced by current holders of Helen Of Troy may raise some interest from shareholders. The stock closed today at a share price of 115.98 on very low momentum in trading volume. The company directors and management have been quite successful in maneuvering the stock at opportune times to take advantage of all market conditions in December. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.4. The current volatility is consistent with the ongoing market swings in December 2023 as well as with Helen Of Troy unsystematic, company-specific events.
"Cash is king" is a familiar adage in finance, and when evaluating the potential of retaining your investment in Helen of Troy (NASDAQ: HELE), it's worth considering.The company's end period cash flow stands at a healthy $29.1M, with total cash from operating activities reaching $208.2M. However, the company's total debt is substantial at $977.08M, including long-term debt of $928.3M. Despite this, Helen of Troy's net asset value is impressive at $2.91B, indicating a strong asset base. The company's operating margin is relatively low at 0.10%, and the net income applicable to common shares is $143.3M. The debt to equity ratio is 0.87%, which is reasonable and suggests that the company is not overly reliant on debt to finance its growth. In conclusion, while there are some concerns around debt levels, Helen of Troy's strong asset base and healthy cash flow suggest that retaining your investment could be a wise decision. .
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