Moderate LeverageHigher leverage compared with earlier cycle highs reduces balance-sheet flexibility. With debt near equity levels, the company has less capacity to absorb macro shocks or fund large strategic initiatives without increasing financing costs or diluting stakeholders.
Inconsistent Cash ConversionWeaker cash conversion and working-capital volatility signal operational friction that can undermine earnings quality. If receivables, inventories or payables remain volatile, future free cash flow could vary materially even if accounting profits appear stable.
Margins Below Peak LevelsAlthough recovery is underway, margins have not fully normalized to historic highs. Structural cost pressures, mix shifts toward lower-margin channels, or promotional intensity could limit margin expansion, capping long-term profitability unless management addresses root causes.