Howard Marks put it nicely when he said that, rather than worrying about share price volatility, ‘The possibility of permanent loss is the risk I worry about… and every practical investor I know worries about.’ When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. Importantly, Capital Clean Energy Carriers Corp. (NASDAQ:CCEC) does carry debt. But the real question is whether this debt is making the company risky.
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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
What Is Capital Clean Energy Carriers’s Debt?
You can click the graphic below for the historical numbers, but it shows that Capital Clean Energy Carriers had US$1.00b of debt in June 2025, down from US$1.26b, one year before. However, it also had US$335.6m in cash, and so its net debt is US$667.5m.
NasdaqGS:CCEC Debt to Equity History September 20th 2025 A Look At Capital Clean Energy Carriers’ Liabilities
According to the last reported balance sheet, Capital Clean Energy Carriers had liabilities of US$217.3m due within 12 months, and liabilities of US$2.49b due beyond 12 months. Offsetting these obligations, it had cash of US$335.6m as well as receivables valued at US$8.11m due within 12 months. So it has liabilities totalling US$2.36b more than its cash and near-term receivables, combined.
The deficiency here weighs heavily on the US$1.24b company itself, as if a child were struggling under the weight of an enormous back-pack full of books, his sports gear, and a trumpet. So we’d watch its balance sheet closely, without a doubt. At the end of the day, Capital Clean Energy Carriers would probably need a major re-capitalization if its creditors were to demand repayment.
See our latest analysis for Capital Clean Energy Carriers
In order to size up a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
While Capital Clean Energy Carriers has a quite reasonable net debt to EBITDA multiple of 1.9, its interest cover seems weak, at 1.8. This does have us wondering if the company pays high interest because it is considered risky. In any case, it’s safe to say the company has meaningful debt. It is well worth noting that Capital Clean Energy Carriers’s EBIT shot up like bamboo after rain, gaining 99% in the last twelve months. That’ll make it easier to manage its 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 Capital Clean Energy Carriers can strengthen its balance sheet over time. So if you’re focused on the future you can check out this free report showing analyst profit forecasts.
Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. So it’s worth checking how much of that EBIT is backed by free cash flow. During the last three years, Capital Clean Energy Carriers burned a lot of cash. While that may be a result of expenditure for growth, it does make the debt far more risky.
Our View
On the face of it, Capital Clean Energy Carriers’s conversion of EBIT to free cash flow left us tentative about the stock, and its level of total liabilities was no more enticing than the one empty restaurant on the busiest night of the year. But on the bright side, its EBIT growth rate is a good sign, and makes us more optimistic. Overall, it seems to us that Capital Clean Energy Carriers’s balance sheet is really quite a risk to the business. So we’re almost as wary of this stock as a hungry kitten is about falling into its owner’s fish pond: once bitten, twice shy, as they say. There’s no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we’ve identified 2 warning signs for Capital Clean Energy Carriers (1 shouldn’t be ignored) you should be aware of.
When all is said and done, sometimes its easier to focus on companies that don’t even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
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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 using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused 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.