Seagate Technology has a total debt of $5.67 billion, 52x its EBITDA of $110.0 million, a return on assets of -9.39% and an Altman Z-Score of 0.25.
You wouldn’t know that its financials were less than stellar, given its stock is up nearly 63% year to date. However, that is the case for the data storage company.
Of the 24 analysts that cover its stock, just 8 rate it Overweight or Buy, with 14 Holds and 2 Underweight or outright Sell, with a $70 target price, well below where it’s currently trading.
On a GAAP basis, Seagate lost $529 million in fiscal 2023 (June year-end). On a non-GAAP basis, it earned $40 million on $7.38 billion in revenue. Its interest expense in 2023 was $313 million, up from $249 million a year earlier.
In Q1 2024, it lost $184 million (GAAP) and $46 million (non-GAAP). Its interest expense was $84 million, 18% higher than a year earlier. While the interest expense hasn’t done the company in yet, it’s got $1.75 billion in debt with interest rates of 8.25% or higher that were issued in late 2022 and 2023.
If you own STX stock, you better hope interest rates decrease significantly in 2024, or its stock is sunk.