This article was originally published in CNBC.
January 11, 2024 | LINK
RapidRatings’ James Gellert: Boeing declines in financial health rating
James Gellert, RapidRatings executive chair, joins ‘The Exchange’ to discuss the financial health of Boeing, shipping companies, and more.
RapidRatings Executive Chairman James Gellert joined CNBC's The Exchange, offering insights on which companies and industries are navigating the tumultuous economic landscape. While some sectors are thriving, others are facing significant challenges.
Boeing In the Hot Seat
Gellert analyzed Boeing's Financial Health Rating (FHR) using RapidRatings, revealing a concerning FHR of 35 and a Core Health Score (CHS) of 18. This places Boeing in the danger zone, where 90% of companies with an FHR of 40 or below have historically failed. He attributes Boeing's recent distress to the challenging high-interest rate environment, affecting other companies as well.
Transportation and Shipping Feeling the Pinch:
Gellert highlighted the shipping industry as one that is thriving. Escalating conflict in the Red Sea has contributed to rising shipping costs, which benefits the shipping industry but may lead to a domino effect on supply chains and the overall cost of global goods.
Middle Market Companies: Bearing the Brunt
He also shed light on the pressure points facing middle market companies in this volatile environment. A recent analysis by RapidRatings and Marblegate, examining the financial health of private companies, revealed a troubling picture:
- Bankruptcy rates for middle market companies have soared 4x higher than their larger counterparts since 2019.
- Profitability has nosedived, with a 20% decline compared to a 20% growth for public companies.
These numbers paint a stark picture of the struggles facing middle market companies—many of which are suppliers and vendors. In these turbulent times, RapidRatings can instill confidence by offering a comprehensive view of the financial well-being of third-party entities, even private ones. With this deep understanding, you can navigate the challenges with greater certainty, make informed decisions about your business relationships, and ultimately, weather the economic storm.