SoftBank (TYO:9984) Group Corp's credit outlook has been improved to stable by Moody's (NYSE:MCO), reflecting the company's reduced leverage and increased transparency following the successful IPO of Arm Holdings (NASDAQ:ARM). The rating agency noted that over the past 18 months, SoftBank has paused new investments, cut down its debt, and improved liquidity. The quality of their investment portfolio has also seen an uplift, with their principal listed assets—shares in SoftBank itself, Arm, and Alibaba—now accounting for more than 60% of total value, surpassing the conglomerate's debt levels.
The adjustment in credit outlook comes as SoftBank shows a more cautious financial management approach, with market value-based leverage declining to 41%. Despite this positive development, challenges remain for the Japanese conglomerate, including low interest coverage and a heavy reliance on dividends from SoftBank Corp for its revenue streams. SoftBank has maintained a distance from Moody’s ratings process since requesting to withdraw the unsolicited Ba3 rating over three years ago.
InvestingPro Insights
InvestingPro's real-time data and tips provide further insights into SoftBank's financial health and strategic moves. The company has been operating under a significant debt burden, a fact that aligns with Moody's observations. However, the management's aggressive strategy of buying back shares has been noted, which could be a positive sign for investors.
In the last twelve months as of Q2 2024, SoftBank reported a revenue of $44,265.11M, with a growth rate of 3.03%. The gross profit stood at a solid $22,343.47M, showing a margin of 50.48%. The company's market cap, adjusted for changes, was $60,645.72M.
InvestingPro Tips also highlight that SoftBank has been a prominent player in the Wireless Telecommunication Services industry and has maintained dividend payments for an impressive 29 consecutive years. Such a record could be a testament to the company's commitment to its shareholders.
For more detailed insights and additional tips, consider subscribing to InvestingPro, now available at a special Black Friday discount of up to 55%. With a wealth of data and over 1000 expert tips, InvestingPro can be your key to informed investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.