We looked at stocks that suffered back in 2016 from a weak balance sheet as measured by an adjusted net debt/EBITDA of 5x or more. Their combined equal weighted performance has been a steady relative decline (see following chart) whether rates pick up or not (above). So the message is clear: shareholders see little benefit from easier financial conditions when companies are stretched and presumably in slow-going businesses. The rebound of ABI cannot hide worries elsewhere.
Relative performance of 23 companies with a net debt/EBITDA above 5x in 2016
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