Some declare volatility, rather than debt, is the best way to consider about risk as an investor, but Warren Buffett famously declared 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 Clean Energy Fuels Corp. (NASDAQ:CLNE) does have debt on its balance sheet. But the real question is whether this debt is building the company risky.
When Is Debt Dangerous?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to receive debt under control. Of course, plenty of companies apply debt to fund growth, without any negative consequences. When we consider about a company’s apply of debt, we first see at cash and debt toreceiveher.
What Is Clean Energy Fuels’s Net Debt?
The chart below, which you can click on for greater detail, displays that Clean Energy Fuels had US$271.6m in debt in March 2025; about the same as the year before. On the flip side, it has US$226.6m in cash leading to net debt of about US$45.0m.
How Strong Is Clean Energy Fuels’ Balance Sheet?
According to the last reported balance sheet, Clean Energy Fuels had liabilities of US$145.0m due within 12 months, and liabilities of US$368.7m due beyond 12 months. Offsetting these obligations, it had cash of US$226.6m as well as receivables valued at US$112.2m due within 12 months. So its liabilities total US$174.9m more than the combination of its cash and short-term receivables.
While this might seem like a lot, it is not so bad since Clean Energy Fuels has a market capitalization of US$475.1m, and so it could probably strengthen its balance sheet by raising capital if it requireded to. However, it is still worthwhile taking a close see at its ability to pay off debt. There’s no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Clean Energy Fuels can strengthen its balance sheet over time. So if you’re focapplyd on the future you can check out this free report displaying analyst profit forecasts.
View our latest analysis for Clean Energy Fuels
In the last year Clean Energy Fuels wasn’t profitable at an EBIT level, but managed to grow its revenue by 4.8%, to US$416m. We usually like to see quicker growth from unprofitable companies, but each to their own.
Caveat Emptor
Over the last twelve months Clean Energy Fuels produced an earnings before interest and tax (EBIT) loss. Its EBIT loss was a whopping US$81m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be applying so much debt. So we consider its balance sheet is a little strained, though not beyond repair. For example, we would not want to see a repeat of last year’s loss of US$200m. So to be blunt we do consider it is risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we’ve identified 2 warning signs for Clean Energy Fuels that you should be aware of.
If, after all that, you’re more interested in a quick growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
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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 applying an unbiased methodology and our articles are not intfinished to be financial advice. It does not constitute a recommfinishation to acquire or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focapplyd 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.
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