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Is Navios Maritime Holdings Inc’s (NM) Balance Sheet Strong Enough To Weather A Storm?

Armando Maloney

Investors are always looking for growth in small-cap stocks like Navios Maritime Holdings Inc (NYSE:NM), with a market cap of USD $162.22M. However, an important fact which most ignore is: how financially healthy is the business? Given that NM is not presently profitable, it’s essential to understand the current state of its operations and pathway to profitability. I believe these basic checks tell most of the story you need to know. Nevertheless, this commentary is still very high-level, so I recommend you dig deeper yourself into NM here.

Does NM generate an acceptable amount of cash through operations?

NM has sustained its debt level by about $1,668.7M over the last 12 months – this includes both the current and long-term debt. At this constant level of debt, the current cash and short-term investment levels stands at $136.0M , ready to deploy into the business. Additionally, NM has generated $36.9M in operating cash flow in the last twelve months, leading to an operating cash to total debt ratio of 0.02x, meaning that NM’s operating cash is not sufficient to cover its debt. This ratio can also be a sign of operational efficiency for loss making businesses as traditional metrics such as return on asset (ROA) requires a positive net income. In NM’s case, it is able to generate 0.02x cash from its debt capital.

Can NM meet its short-term obligations with the cash in hand?

Looking at NM’s most recent $251.8M liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.08x. For marine companies, this ratio is within a sensible range since there is a bit of a cash buffer without leaving too much capital in a low-return environment.

NYSE:NM Historical Debt Dec 5th 17

Can NM service its debt comfortably?

With total debt exceeding equities, NM is considered a highly levered company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible. Though, since NM is currently loss-making, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.

Next Steps:

Are you a shareholder? NM’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. Though, its high liquidity ensures the company will continue to operate smoothly should unfavourable circumstances arise. Given that its financial position may change. I suggest researching market expectations for NM’s future growth on our free analysis platform.

Are you a potential investor? NM’s high debt levels is not met with high cash flow coverage. This leaves room for improvement in terms of debt management and operational efficiency. Though, the company will be able to pay all of its upcoming liabilities from its current short-term assets. You should continue your analysis by taking a look at NM’s past performance analysis on our free platform to figure out NM’s financial health position.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.