RE: Is Capita (LON:CPI) Using Debt Sensibly?12 Oct 2022 12:58
Importantly, Capita had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost a very considerable UK£206m at the EBIT level. If you consider the significant liabilities mentioned above, we are extremely wary of this investment. Of course, it may be able to improve its situation with a bit of luck and good execution. Nevertheless, we would not bet on it given that it vaporized UK£153m in cash over the last twelve months, and it doesn't have much by way of liquid assets. So we think this stock is risky, like walking through a dirty dog park with a mask on. For riskier companies like Capita I always like to keep an eye on whether insiders are buying or selling.