Is Synaptics (NASDAQ:SYNA) A Risky Investment?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. We can see that Synaptics Incorporated (NASDAQ:SYNA) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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. When we think about a company's use of debt, we first look at cash and debt together.

What Is Synaptics's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Synaptics had US$834.8m of debt in June 2025, down from US$972.9m, one year before. However, it does have US$452.5m in cash offsetting this, leading to net debt of about US$382.3m.

A Look At Synaptics' Liabilities

We can see from the most recent balance sheet that Synaptics had liabilities of US$270.9m falling due within a year, and liabilities of US$918.6m due beyond that. Offsetting these obligations, it had cash of US$452.5m as well as receivables valued at US$130.3m due within 12 months. So its liabilities total US$606.7m more than the combination of its cash and short-term receivables.

While this might seem like a lot, it is not so bad since Synaptics has a market capitalization of US$2.63b, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off 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 Synaptics can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for Synaptics

In the last year Synaptics wasn't profitable at an EBIT level, but managed to grow its revenue by 12%, to US$1.1b. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, Synaptics had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost US$63m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of US$48m into a profit. So we do think this stock is quite risky. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. For example, we've discovered 1 warning sign for Synaptics that you should be aware of before investing here.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.