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Is Shikun & Binui (TLV:SKBN) Using Debt In A Risky Way?

Simply Wall St · 2d ago

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said 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. Importantly, Shikun & Binui Ltd. (TLV:SKBN) does carry debt. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

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. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

How Much Debt Does Shikun & Binui Carry?

The chart below, which you can click on for greater detail, shows that Shikun & Binui had ₪13.7b in debt in September 2025; about the same as the year before. However, it also had ₪2.67b in cash, and so its net debt is ₪11.0b.

debt-equity-history-analysis
TASE:SKBN Debt to Equity History December 25th 2025

A Look At Shikun & Binui's Liabilities

Zooming in on the latest balance sheet data, we can see that Shikun & Binui had liabilities of ₪10.3b due within 12 months and liabilities of ₪9.24b due beyond that. Offsetting this, it had ₪2.67b in cash and ₪4.19b in receivables that were due within 12 months. So it has liabilities totalling ₪12.7b more than its cash and near-term receivables, combined.

Given this deficit is actually higher than the company's market capitalization of ₪10.8b, we think shareholders really should watch Shikun & Binui's debt levels, like a parent watching their child ride a bike for the first time. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Shikun & Binui will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

Check out our latest analysis for Shikun & Binui

In the last year Shikun & Binui wasn't profitable at an EBIT level, but managed to grow its revenue by 19%, to ₪9.5b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, Shikun & Binui had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at ₪143m. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of ₪877m over the last twelve months. So suffice it to say we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 3 warning signs for Shikun & Binui (2 can't be ignored!) that you should be aware of before investing here.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.