H
oward Marks once warned that investors should focus less on share‑price swings and more on the real danger of permanent loss. That sentiment rings true when evaluating a company’s leverage, because excessive debt can sink even a solid business.
Anywhere Real Estate Inc. (NYSE: HOUS) carries debt, but the key question is whether that debt makes the firm vulnerable. With President Trump’s pledge to boost U.S. oil and gas, 15 American stocks—including HOUS—stand to benefit from the ensuing developments.
**Debt’s Impact on Risk**
Leverage can fuel growth, yet a firm that cannot repay its creditors is at their mercy. Capitalism’s “creative destruction” often forces indebted companies to raise capital at distressed prices or face liquidation. While not ubiquitous, such scenarios can permanently dilute shareholders.
**Where HOUS Stands**
At June 30, 2025, HOUS reported $2.97 billion in total debt, up from $2.81 billion a year earlier. With $266 million in cash, the net debt sits around $2.71 billion. The balance sheet shows $1.55 billion of short‑term liabilities and $2.79 billion of long‑term obligations, offset by $266 million in cash and $412 million in receivables due within a year. Net liabilities exceed liquid assets by roughly $3.65 billion, casting a shadow over the $799.9 million market cap. A major recapitalization would likely be required if creditors demanded repayment.
**Debt‑to‑Earnings Metrics**
We gauge leverage by net debt divided by EBITDA and by interest coverage (EBIT/interest). HOUS’s net debt‑to‑EBITDA ratio is 10.3, and its interest coverage is a weak 0.49, indicating a heavy debt load. However, EBIT rose 95% over the past year, improving the company’s ability to service debt.
**Cash Flow Considerations**
Debt repayment depends on cash, not accounting profits. Over the last three years, HOUS generated free cash flow equal to only 15% of EBIT—a modest conversion rate that undermines its capacity to reduce debt.
**Risk Assessment**
The combination of high leverage, low interest coverage, and weak cash conversion signals significant risk. While EBIT growth is encouraging, the balance sheet remains a concern. Investors should treat HOUS with caution, similar to a wary kitten avoiding a fish pond after a first mishap.
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*This analysis is based on historical data and analyst forecasts. It is not investment advice and does not reflect any position in the stocks mentioned.*
