Sif Holding (AMS:SIFG) Has Debt But No Earnings; Should You Worry?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that Sif Holding N.V. (AMS:SIFG) does use debt in its business. But the real question is whether this debt is making the company risky.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Why Does Debt Bring Risk?

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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Sif Holding Carry?

The image below, which you can click on for greater detail, shows that at June 2025 Sif Holding had debt of €80.4m, up from €60.0m in one year. But on the other hand it also has €82.5m in cash, leading to a €2.06m net cash position.

A Look At Sif Holding's Liabilities

We can see from the most recent balance sheet that Sif Holding had liabilities of €249.0m falling due within a year, and liabilities of €260.3m due beyond that. Offsetting these obligations, it had cash of €82.5m as well as receivables valued at €47.8m due within 12 months. So its liabilities total €379.0m more than the combination of its cash and short-term receivables.

The deficiency here weighs heavily on the €202.6m company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we definitely think shareholders need to watch this one closely. After all, Sif Holding would likely require a major re-capitalisation if it had to pay its creditors today. Given that Sif Holding has more cash than debt, we're pretty confident it can handle its debt, despite the fact that it has a lot of liabilities in total. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Sif Holding can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Sif Holding

Over 12 months, Sif Holding made a loss at the EBIT level, and saw its revenue drop to €456m, which is a fall of 2.3%. That's not what we would hope to see.

So How Risky Is Sif Holding?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Sif Holding had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through €46m of cash and made a loss of €35m. With only €2.06m on the balance sheet, it would appear that its going to need to raise capital again soon. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. 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 Sif Holding insider transactions.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.