Asset Breakdown
4.2 B
Assets Non Current
Goodwill
1.9 B
Current Assets
| Total Assets | 4.94 Billion | |
| Current Assets | 1.95 Billion | |
| Assets Non Current | 4.17 Billion | |
| Goodwill | 318.16 Million | |
| Tax Assets | 202.15 Million |
Continue to hold GreenTree (USA Stocks:GHG) based on its current debt obligations?
 | By Ellen Johnson | Macroaxis Story |
GreenTree Hospitality Group carries a debt of 2.06 billion, with a debt-to-equity (D/E) ratio of 0.35. This ratio is acceptable within its current industry classification. The company's current ratio stands at 1.44, which is standard for the industry and is considered normal. Debt can be beneficial for GreenTree Hospitality until it encounters difficulties in paying it off, either with new capital or with free cash flow. Therefore, if GreenTree Hospitality fails to meet its legal obligations to repay its debt, shareholders could potentially lose their entire investment. However, a more common scenario is when companies like GreenTree Hospitality issue additional shares at discounted prices, thereby diluting the value of existing shares. In this context, debt can be an excellent tool for GreenTree to invest in growth at high rates of return. When evaluating GreenTree Hospitality's use of debt, it is crucial to consider it in conjunction with cash and equity.
Important Highlights
GreenTree Hospitality Group (GHG) presents a favorable investment opportunity from a leverage perspective. The company's long-term debt stands at a manageable $160M, which is significantly lower than its total revenue of $945.1M. This indicates that GHG has a healthy debt-to-revenue ratio, suggesting that the company is not overly reliant on debt to finance its operations. Furthermore, GHG's cash and short-term investments amount to $873.5M, providing a substantial buffer to meet its debt obligations. Despite a net income loss of $409.2M, the company's manageable debt and substantial cash reserves position it well to weather financial uncertainties. Therefore, investors are advised to maintain their positions in GHG, as the company's manageable debt obligations and strong cash position provide a solid foundation for future growth.Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.
Reviewed by Gabriel Shpitalnik
Every cloud has a silver lining, and this holds true for investors of GreenTree Hospitality Group (GHG). Despite the company's loss of $437.7M in EBIT, the firm's total revenue stands at a robust $945.1M, demonstrating its ability to generate substantial cash flow. With a net invested capital of $1.9B and total cash from operating activities amounting to $281.7M, GHG has demonstrated a commendable financial position. Furthermore, the company's total current liabilities of $1.2B and non-current liabilities of $2.4B are manageable, considering its strong revenue stream and capital. Therefore, investors are advised to maintain their positions in GHG, given its potential for recovery and growth. GreenTree Hospitality Group is set to announce its earnings today. The company's next fiscal year-end is anticipated to be on April 4, 2024. It is projected that GreenTree Hospitality's Free Cash Flow may experience a significant decrease in the coming years. Currently, the company's Invested Capital is expected to rise to approximately $5.8 billion, while its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is forecasted to decrease to $119.2 million. Amidst the frenzy of overanalysis by many traders in the hotels, restaurants, and leisure space, it is prudent to consider GreenTree Hospitality Group as a viable investment option. So, what can GreenTree Hospitality shareholders expect in December?GreenTree Hospitality financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of GreenTree Hospitality, including all of GreenTree Hospitality's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of GreenTree Hospitality assets, the company is considered highly leveraged. Understanding the composition and structure of overall GreenTree Hospitality debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.
Understanding GreenTree Total Liabilities
GreenTree Hospitality liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. GreenTree Hospitality has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on GreenTree Hospitality balance sheet include debt obligations and money owed to different GreenTree Hospitality vendors, workers, and loan providers. Below is the chart of GreenTree short long-term liabilities accounts currently reported on its balance sheet. You can use GreenTree Hospitality Group financial leverage analysis tool to get a better grip on understanding its financial positionHow important is GreenTree Hospitality's Liquidity
GreenTree Hospitality financial leverage refers to using borrowed capital as a funding source to finance GreenTree Hospitality Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. GreenTree Hospitality financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to GreenTree Hospitality's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of GreenTree Hospitality's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between GreenTree Hospitality's total debt and its cash.
What is the case for GreenTree Hospitality Investors
The big decline in price over the last few months for GreenTree Hospitalitymay raise some interest from stockholders. The stock closed today at a share price of 4.39 on 11,352 in trading volume. The company directors and management failed to add value to investors and position the firm supply of money to exploit market volatility in October. However, diversifying your holdings with GreenTree Hospitality or similar stocks can still protect your portfolios during high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.31. The current volatility is consistent with the ongoing market swings in October 2023 as well as with GreenTree Hospitality Group unsystematic, company-specific events.
"As the saying goes, 'Cash is king,' and GreenTree Hospitality Group (USA Stocks: GHG) is no exception. With an end period cash flow of 700.4M and total cash from operating activities at 281.7M, the company demonstrates a strong liquidity position. This is further supported by a current ratio of 1.47X, indicating the company's ability to meet short-term obligations. Despite a net debt of 1.4B, the company's manageable debt obligations are reflected in its short and long-term debt totals of 452M and 160M respectively. Furthermore, GreenTree's market capitalization stands at 448.57M, and with a price to earnings ratio of 6.94X, the stock appears undervalued. Given these factors, it is advisable to maintain your position in GreenTree Hospitality Group, as the company's financial health and potential for growth make it a promising investment." .
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