Market Overview

10 Stocks With The Highest Long-Term Debt Loads

10 Stocks With The Highest Long-Term Debt Loads

Investors looking for stocks to buy should always take a look at debt loads to make sure they won’t get blindsided by balance sheet issues at some point down the line.

When the economy is good, there’s easy credit everywhere. However, as investors back in 2007 and 2008 learned the hard way, when the economy goes south, lenders get tight with their cash.

Companies that rely on debt to fund their operations often trade at a valuation discount to self-funding peers. Debt payments can hang like a dark cloud over a company and weigh on its share price. In addition, the more debt a company takes on, the more expensive additional debt may be. If a company’s balance sheet gets too bloated, credit rating agencies can downgrade a stock’s credit rating. A lower credit rating means higher interest rates on debt.

Some industries are more debt-reliant than others, so just because a company has relatively high debt levels doesn’t necessarily mean investors should stay away from a stock. But almost every time a company goes belly-up, debt plays a role in its downfall.

High-Debt Stocks

Here are the 10 S&P 500 stocks with the highest long-term debt-to-equity ratios in the S&P 500, according to Finviz:

  1. The Western Union Company (NYSE: WU), 93.1 LTDebt/Eq.
  2. Navient Corp (NASDAQ: NAVI), 26.2 LTDebt/Eq.
  3. O'Reilly Automotive Inc (NASDAQ: ORLY), 26.1 LTDebt/Eq.
  4. Lamb Weston Holdings Inc (NYSE: LW), 23.9 LTDebt/Eq.
  5. Moody's Corporation (NYSE: MCO), 14.9 LTDebt/Eq.
  6. Marriott International Inc (NASDAQ: MAR), 8.2 LTDebt/Eq.
  7. Simon Property Group Inc (NYSE: SPG), 8.1 LTDebt/Eq.
  8. S&P Global Inc (NYSE: SPGI), 7.1 LTDebt/Eq.
  9. Alliance Data Systems Corporation (NYSE: ADS), 7.0 LTDebt/Eq.
  10. Campbell Soup Company (NYSE: CPB), 6.4 LTDebt/Eq.

Benzinga’s Take

In addition to looking at existing debt levels, investors should look to see how those debt levels have changed in the past several years. Companies with stable debt levels or falling debt levels may be perfectly fine investments, but steadily rising debt levels may be a sign of an unsustainable business model.

Do you agree with this take? Email with your thoughts.

Related Links:

9 Stocks With The Highest Short Percent Of Float

16 Stocks With The Highest Long-Term Sales Growth Rate

Photo credit: Usien [GFDL)], via Wikimedia Commons


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