Debt ratio – ATRX http://atrx.net/ Wed, 25 May 2022 01:07:45 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://atrx.net/wp-content/uploads/2021/10/icon-3-120x120.png Debt ratio – ATRX http://atrx.net/ 32 32 $0.18 EPS expected for Oaktree Specialty Lending Co. (NASDAQ:OCSL) this quarter https://atrx.net/0-18-eps-expected-for-oaktree-specialty-lending-co-nasdaqocsl-this-quarter/ Wed, 25 May 2022 00:23:17 +0000 https://atrx.net/0-18-eps-expected-for-oaktree-specialty-lending-co-nasdaqocsl-this-quarter/ Analysts predict that Oaktree Specialty Lending Co. (NASDAQ:OCSL – Get a rating) will report earnings of $0.18 per share for the current quarter, according to Zacks Investment Research. Two analysts released earnings estimates for Oaktree Specialty Lending, with the highest EPS estimate at $0.18 and the lowest estimate at $0.17. Oaktree Specialty Lending reported earnings […]]]>

Analysts predict that Oaktree Specialty Lending Co. (NASDAQ:OCSLGet a rating) will report earnings of $0.18 per share for the current quarter, according to Zacks Investment Research. Two analysts released earnings estimates for Oaktree Specialty Lending, with the highest EPS estimate at $0.18 and the lowest estimate at $0.17. Oaktree Specialty Lending reported earnings of $0.19 per share in the same quarter last year, indicating a negative 5.3% year-over-year growth rate. The company is expected to announce its next earnings report on Monday, January 1.

According to Zacks, analysts expect Oaktree Specialty Lending to report annual earnings of $0.72 per share for the current fiscal year, with EPS estimates ranging from $0.71 to $0.72. For the next fiscal year, analysts expect the company to report earnings of $0.70 per share, with EPS estimates ranging from $0.68 to $0.72. Zacks Investment Research’s EPS calculations are an average based on a survey of sell-side research firms that cover Oaktree’s specialty lending.

Oaktree Specialty Loans (NASDAQ:OCSLGet a rating) last released its quarterly earnings data on Thursday, May 5. The credit service provider reported earnings per share (EPS) of $0.18 for the quarter, beating consensus analyst estimates of $0.17 by $0.01. Oaktree Specialty Lending had a net margin of 53.18% and a return on equity of 9.59%. The company posted revenue of $64.30 million in the quarter, versus a consensus estimate of $58.95 million.

Several research analysts have recently weighed in on OCSL shares. Zacks Investment Research moved shares of Oaktree Specialty Lending from a “hold” rating to a “buy” rating and set a target price of $8.25 for the company in a Tuesday, May 10 report. The Hovde Group lowered its target price on shares of Oaktree Specialty Lending to $7.00 in a report on Friday. To finish, StockNews.com began covering Oaktree Specialty Lending stocks in a Thursday, March 31 report. They issued a “maintaining” rating for the company. One research analyst gave the stock a hold rating and three gave the company’s stock a buy rating. Based on data from MarketBeat, the stock currently has a consensus buy rating and a consensus price target of $7.81.

Separately, Chairman Mathew Pendo purchased 18,381 shares of the company in a transaction on Monday, May 9. The shares were acquired at an average price of $7.06 per share, for a total transaction of $129,769.86. Following the purchase, the president now directly owns 103,591 shares of the company, valued at $731,352.46. The purchase was disclosed in a filing with the SEC, accessible via this link. Additionally, director Phyllis R. Caldwell purchased 5,000 shares of the company in a trade on Wednesday, May 11. The stock was purchased at an average price of $7.04 per share, for a total transaction of $35,200.00. Following the purchase, the director now owns 7,700 shares of the company, valued at $54,208. Disclosure of this purchase can be found here. During the last quarter, insiders acquired 25,981 shares of the company worth $184,262. Company insiders own 0.32% of the company’s shares.

Several hedge funds and other institutional investors have recently changed their positions in OCSL. Oaktree Capital Management LP increased its position in Oaktree Specialty Lending shares by 1,526.9% during the third quarter. Oaktree Capital Management LP now owns 4,490,368 shares of the credit service provider valued at $31,701,000 after buying an additional 4,214,368 shares last quarter. Greenwich Investment Management Inc. acquired a new stake in Oaktree Specialty Lending in Q4 for a value of approximately $18,335,000. Invesco Ltd. increased its position in Oaktree Specialty Lending by 911.0% in Q4. Invesco Ltd. now owns 1,870,776 shares of the credit service provider worth $13,956,000 after purchasing an additional 1,685,736 shares during the period. Millennium Management LLC increased its position in Oaktree Specialty Lending by 149.5% in Q3. Millennium Management LLC now owns 2,260,466 shares of the credit service provider worth $15,959,000 after purchasing an additional 1,354,562 shares during the period. Finally, Van ECK Associates Corp raised its position in Oaktree Specialty Lending by 48.4% in the 1st quarter. Van ECK Associates Corp now owns 3,868,924 shares of the credit service provider worth $28,514,000 after purchasing an additional 1,261,296 shares during the period. Hedge funds and other institutional investors hold 65.27% of the company’s shares.

Shares of OCSL Action traded down $0.08 in midday trading on Tuesday, hitting $6.74. 1,967,140 shares of the company were traded, compared to its average volume of 1,143,657. Oaktree Specialty Lending has a 12-month low of $6.57 and a 12-month high of $7.81. The company has a 50-day moving average price of $7.28 and a two-hundred-day moving average price of $7.40. The company has a debt ratio of 0.47, a quick ratio of 0.09 and a current ratio of 0.09. The company has a market capitalization of $1.24 billion, a PE ratio of 8.87 and a beta of 1.31.

The company also recently declared a quarterly dividend, which will be paid on Thursday, June 30. Shareholders of record on Wednesday, June 15 will receive a dividend of $0.165. The ex-dividend date is Tuesday, June 14. This represents an annualized dividend of $0.66 and a yield of 9.79%. This is a boost from Oaktree Specialty Lending’s previous quarterly dividend of $0.16. Oaktree Specialty Lending’s payout ratio is currently 84.21%.

About Oaktree Specialty Loans (Get a rating)

Oaktree Specialty Lending Corporation is a business development company specializing in middle market investments, bridge financing, first and second lien debt financing, unsecured and mezzanine loans, mezzanine debt, senior and junior secured debt , expansions, sponsor-led acquisitions, preferred stock and management buy-outs in small and medium-sized businesses.

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MACAU DAILY TIMES 澳門每日時報 » The real estate sector and the economic slowdown in China (I) https://atrx.net/macau-daily-times-%e6%be%b3%e9%96%80%e6%af%8f%e6%97%a5%e6%99%82%e5%a0%b1-the-real-estate-sector-and-the-economic-slowdown-in-china-i/ Mon, 23 May 2022 00:06:46 +0000 https://atrx.net/macau-daily-times-%e6%be%b3%e9%96%80%e6%af%8f%e6%97%a5%e6%99%82%e5%a0%b1-the-real-estate-sector-and-the-economic-slowdown-in-china-i/ Jorge Costa Oliveira Although China’s gross domestic profit (GDP) growth reached 8.1% in 2021in the Second part of the year, China’s GDP grew only 4.9% in the third quarter and 3.9% in the fourth quarter. For 2022, the F international currencyand revised Chinese GDP growth down to 4.4%. Several reasons explain this economic slowdown, mainly […]]]>

Jorge Costa Oliveira

Although China’s gross domestic profit (GDP) growth reached 8.1% in 2021in the Second part of the year, China’s GDP grew only 4.9% in the third quarter and 3.9% in the fourth quarter. For 2022, the F international currencyand revised Chinese GDP growth down to 4.4%. Several reasons explain this economic slowdown, mainly measures related to the real estate sector. According to a 2020 World Bank reportthe share of housing-related activities in fixed assets investment and China’s GDP is now well above levels in the United States at the height of its housing boom in 2006.

Real estate matters 30% of the country’s GDP. Housing prices in urban China have tripled over the past 20 years, the ratio of housing prices to annual income hovering around 43.15 in Shenzhen, 42.47 in Beijing and 33.36 in Shanghai, compared to 13.37 in London and 8.76 in New York. Speculation is also relevant here, mainly because the alternatives for investing family and business savings – in financial markets and the banking system – have historically offered very low rates of return. This is why, at the 19th National Congress of the Communist Party of China, Chinese President Xi Jinping declared that “houses are made for living in, not for speculation.

In order to stabilize house prices, force real estate developers to reduce bank debt and reduce the exposure of commercial banks to the sector, the Chinese government introduced three important measures at the end of 2020. The first was the imposition of “three red lines» for real estate developers: some large developers cannot have a debt ratio greater than 70%, a net debt ratio greater than 100% or a cash-to-short-term debt ratio of ≥ 1. Regulators will impose stricter debt limits to developers who cross these red lines.

China has also introduced new limits on bank exposure to real estate. For large state-owned commercial banks, home loans cannot exceed 40% of the total, and mortgage loans are limited to 32.5%. Ultimately, China has revised how local governments can dispose of property rights. As a result, the cumulative growth rate of real estate financing fell from 54.2% in January 2021 to 4.2% in December of the same year. Over the same period, the cumulative growth rate of total home sales fall from 133.4% to 4.8% in terms of square feet and from 104.9% to 1.9% in terms of value.

As a result, China’s cumulative real estate development investment Rate of growth fell from 38.3% to 4.4%. Underscoring the relevance of real estate investment, total investment growth in China in 2021 fell from 35% in January to 4.9% in December. To compensate for this decline, infrastructure investment could have been increased, but it only increased by 0.4% in 2021. The Chinese government still has room to adopt fiscal and monetary policies to stimulate growth. . He hesitated to do it when there was no inflation, and now it is more difficult.

linkedin.com/in/jorgecostaoliveira

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Ghana’s public debt hits over ¢391 billion in Q1 2022 https://atrx.net/ghanas-public-debt-hits-over-%c2%a2391-billion-in-q1-2022/ Sat, 21 May 2022 08:47:23 +0000 https://atrx.net/ghanas-public-debt-hits-over-%c2%a2391-billion-in-q1-2022/ However, compared to the country’s Gross Domestic Product, the debt was estimated at 78%. This is slightly lower than the 80% recorded in December 2021. According to the figures, the debt increased by 20.5 trillion yen in January 2022 and then by 19.7 trillion yen in February 2022. As for the domestic debt, it increased […]]]>

However, compared to the country’s Gross Domestic Product, the debt was estimated at 78%. This is slightly lower than the 80% recorded in December 2021.

According to the figures, the debt increased by 20.5 trillion yen in January 2022 and then by 19.7 trillion yen in February 2022.

As for the domestic debt, it increased by ¢8 billion in the first quarter of 2022 to reach ¢189.9 billion in March 2021. This is equivalent to 37.8% of GDP.

Additionally, the external component of total government debt rose to $28.4 billion (¢201.9 billion) in March 2022 from $28.1 billion in December 2021. From the numbers, one can clearly infer that there was no borrowing on the external front in the first quarter of this year.

The debt-to-GDP ratio of external debt, however, is around 40.2% of GDP.

The cedi component jumped ¢31.9 billion in the first three months of 2022, mainly due to the decline in the value of the cedi against the dollar during the period.

In contrast, the financial sector resolution obligation fell to ¢14.6 trillion in March 2022 from the ¢14.9 trillion recorded in December 2021. This is equivalent to 2.9% of GDP.

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Target stock drops 20% after missing earnings by a mile. What didn’t go well. https://atrx.net/target-stock-drops-20-after-missing-earnings-by-a-mile-what-didnt-go-well/ Wed, 18 May 2022 12:37:00 +0000 https://atrx.net/target-stock-drops-20-after-missing-earnings-by-a-mile-what-didnt-go-well/ Text size Earnings targets were well below analysts’ expectations. AFP via Getty Images Target The stock tumbled after the retailer reported first-quarter adjusted earnings of $2.19 a share, well below analysts’ forecasts. It’s not just the last quarter that has seen Target stock tumble, down nearly 24%. The retailer also said that for the second […]]]>

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These 4 measures indicate that Sika (VTX:SIKA) uses debt safely https://atrx.net/these-4-measures-indicate-that-sika-vtxsika-uses-debt-safely/ Mon, 16 May 2022 04:50:09 +0000 https://atrx.net/these-4-measures-indicate-that-sika-vtxsika-uses-debt-safely/ Warren Buffett said: “Volatility is far from synonymous with risk. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We note that Sika AG (VTX:SIKA) has debt on its balance sheet. But the real question is whether this debt makes the […]]]>

Warren Buffett said: “Volatility is far from synonymous with risk. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We note that Sika AG (VTX:SIKA) has debt on its balance sheet. But the real question is whether this debt makes the business risky.

What risk does debt carry?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. If things go really bad, lenders can take over the business. However, a more frequent (but still costly) event is when a company has to issue shares at bargain prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. The first step when considering a company’s debt levels is to consider its cash and debt together.

Discover our latest analysis for Sika

What is Sika’s debt?

The image below, which you can click on for more details, shows that Sika had CHF 3.40 billion in debt at the end of December 2021, a reduction from CHF 3.86 billion year-on-year. On the other hand, it has 1.18 billion francs in cash, which results in a net debt of approximately 2.22 billion francs.

SWX: History of SIKA’s debt versus equity May 16, 2022

How strong is Sika’s balance sheet?

We can see from the most recent balance sheet that Sika had liabilities of CHF 2.09 billion due in one year, and liabilities of CHF 4.22 billion due beyond. On the other hand, it had 1.18 billion francs in cash and 1.59 billion francs in receivables at less than one year. It therefore has liabilities totaling 3.54 billion francs more than its cash and short-term receivables, combined.

Given that publicly traded Sika shares are worth a very impressive total of CHF 40.6 billion, it seems unlikely that this level of liability is a major threat. But there are enough liabilities that we certainly recommend that shareholders continue to monitor the balance sheet in the future.

In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). The advantage of this approach is that we consider both the absolute amount of debt (with net debt to EBITDA) and the actual interest expense associated with that debt (with its interest coverage ratio ).

Sika’s net debt is only 1.3 times its EBITDA. And its EBIT covers its interest charges 30.7 times more. So we’re pretty relaxed about his super-conservative use of debt. Also positive, Sika has increased its EBIT by 23% over the last year, which should facilitate debt repayment in the future. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future earnings, more than anything, that will determine Sika’s ability to maintain a healthy balance sheet in the future. So if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

But our last consideration is also important, because a company cannot pay debt with paper profits; he needs cash. We must therefore clearly examine whether this EBIT generates a corresponding free cash flow. Over the past three years, Sika has recorded free cash flow of 88% of its EBIT, which is higher than what we would normally expect. This puts him in a very strong position to pay off the debt.

Our point of view

Sika’s interest coverage suggests she can manage her debt as easily as Cristiano Ronaldo could score a goal against an Under-14 keeper. And the good news doesn’t stop there, since its conversion of EBIT into free cash flow also confirms this impression! Given this range of factors, it seems to us that Sika is quite cautious with its leverage, and the risks seem well contained. The balance sheet therefore seems rather healthy to us. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. These risks can be difficult to spot. Every business has them, and we’ve spotted 2 warning signs for Sika you should know.

If you are interested in investing in companies that can generate profits without the burden of debt, then check out this free list of growing companies that have net cash on the balance sheet.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Boasting a return on equity of 16%, is Lapidoth Capital Ltd (TLV:LAPD) a superior stock? https://atrx.net/boasting-a-return-on-equity-of-16-is-lapidoth-capital-ltd-tlvlapd-a-superior-stock/ Mon, 09 May 2022 04:55:35 +0000 https://atrx.net/boasting-a-return-on-equity-of-16-is-lapidoth-capital-ltd-tlvlapd-a-superior-stock/ One of the best investments we can make is in our own knowledge and skills. With that in mind, this article will explain how we can use return on equity (ROE) to better understand a business. Learning by doing, we will look at ROE to better understand Lapidoth Capital Ltd (TLV:LAPD). Return on Equity or […]]]>

One of the best investments we can make is in our own knowledge and skills. With that in mind, this article will explain how we can use return on equity (ROE) to better understand a business. Learning by doing, we will look at ROE to better understand Lapidoth Capital Ltd (TLV:LAPD).

Return on Equity or ROE is a test of how effectively a company increases its value and manages investors’ money. In simpler terms, it measures a company’s profitability relative to equity.

Check out our latest analysis for Lapidoth Capital

How to calculate return on equity?

the ROE formula is:

Return on equity = Net income (from continuing operations) ÷ Equity

So, based on the above formula, Lapidoth Capital’s ROE is:

16% = ₪382m ÷ ₪2.4b (Based on the last twelve months to December 2021).

“Yield” refers to a company’s earnings over the past year. This means that for every ₪1 of equity, the company generated 0.16₪ of profit.

Does Lapidoth Capital have a good return on equity?

By comparing a company’s ROE with the average for its industry, we can get a quick measure of its quality. It is important to note that this measure is far from perfect, as companies differ significantly within the same industry classification. Fortunately, Lapidoth Capital has an above-average ROE (6.1%) for the energy services industry.

TASE:LAPD Return on Equity May 9, 2022

It’s a good sign. However, keep in mind that a high ROE does not necessarily indicate efficient profit generation. In addition to changes in net income, a high ROE can also be the result of high debt to equity, which indicates risk. Our risk dashboard should contain the 4 risks we have identified for Lapidoth Capital.

Why You Should Consider Debt When Looking at ROE

Companies generally need to invest money to increase their profits. This money can come from issuing shares, retained earnings or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve returns, but will not change equity. In this way, the use of debt will increase ROE, even though the core economics of the business remains the same.

Combine Lapidoth Capital’s debt and its 16% return on equity

Lapidoth Capital uses a high amount of debt to increase returns. Its debt to equity ratio is 1.12. There’s no doubt that its ROE is decent, but the company’s sky-high debt isn’t too exciting to see. Debt increases risk and reduces options for the business in the future, so you generally want to see good returns using it.

Conclusion

Return on equity is a way to compare the business quality of different companies. In our books, the highest quality companies have a high return on equity, despite low leverage. If two companies have the same ROE, I would generally prefer the one with less debt.

But when a company is of high quality, the market often gives it a price that reflects that. Earnings growth rates, relative to expectations reflected in the share price, are particularly important to consider. You can see how the company has grown in the past by watching this FREE detailed graph past profits, revenue and cash flow.

But note: Lapidoth Capital may not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Why Dave Ramsey is wrong about canceling credit cards https://atrx.net/why-dave-ramsey-is-wrong-about-canceling-credit-cards/ Sat, 07 May 2022 13:00:24 +0000 https://atrx.net/why-dave-ramsey-is-wrong-about-canceling-credit-cards/ Image source: Getty Images You might regret listening to this financial advice. Key points Dave Ramsey suggests canceling credit cards as soon as you’ve paid off your balance. He doesn’t believe the impact on your credit score matters. Listening to these tips could come back to haunt you with a lower credit score. Dave Ramsey […]]]>

Image source: Getty Images

You might regret listening to this financial advice.


Key points

  • Dave Ramsey suggests canceling credit cards as soon as you’ve paid off your balance.
  • He doesn’t believe the impact on your credit score matters.
  • Listening to these tips could come back to haunt you with a lower credit score.

Dave Ramsey is a well-known financial expert, and one of his biggest tips is to avoid debt. Not only does he suggest that you shouldn’t borrow and pay interest, but he also believes that you shouldn’t use credit cards at all.

Given that Ramsey doesn’t think credit cards are worth it, it’s probably unsurprising that he advises consumers to cancel their cards as soon as they’ve paid the balance owing. But, while he advised that closing credit cards is a smart financial move, it’s actually really bad advice.

Here’s what Ramsey said about canceling credit cards

The issue of closing credit cards was discussed on the Ramsey Solutions Blog. As the blog explains, it’s not enough to promise to stop using credit cards or even cut your cards so you can’t easily use them.

“Just because you destroy your cards and pledge never to use them again, doesn’t mean they’re gone – you should also close the accounts,” the blog post reads. Ramsey goes on to give advice on how to close your account, including waiting until you’ve paid your balance, then contacting your card issuer to close the account, and then getting confirmation in writing.

The blog acknowledges, however, that the general consensus among financial experts is that closing credit accounts is a bad idea. “It turns out that a lot of people will try to tell you that closing a credit card is the worst decision of your life. Don’t worry, that’s not even a tiny bit true,” it reads.

Ramsey plays down very valid reasons why shutting down old cards is a bad idea, suggesting you should go ahead with this financial move even if it might come back to haunt you.

Ramsey is wrong to close old credit cards

The main reason most experts advise against closing old credit card accounts is that it can hurt your credit score. And Ramsey’s blog acknowledges that’s a problem. “When you close your credit card account, your score will drop a bit, but only for a short time.”

The reality, however, is that depending on your situation, closing your old account may have a bigger impact than it suggests and the impact could be long term.

You see, your credit score is based on several factors. These include payment history, the average age of your accounts, the types of credit you have, the amount of credit you use compared to the amount you have, and inquiries that are placed on your credit report when you apply for credit. new credit.

The impact of closing a credit card account

Closing credit cards affects many of these key factors that determine your score. If you close old accounts, your average credit age will be shorter and this hurts your score because a long history of responsible borrowing is better. You will stop developing a positive payment history once your card is unopened, and eventually the card will drop your credit report, which means you will lose the history of payments made on time in the past.

More importantly, your credit utilization ratio could be affected and this is the second most important factor in determining your score. To understand how, let’s take a simple example.

Let’s say you have two credit cards, each with a $1,000 limit, and you charged $500 on one card and nothing on the other. If you close the account with a $0 balance, your credit utilization rate is $500 used out of $1,000 available (50%) – and a high utilization rate hurts your score. But if you doesn’t close your old account, your ratio would be $500 to $2,000, which means you’d only be using 25% of the available credit (anything over 30% lowers your score a bit).

Ultimately, there is no reason to close old credit cards and hurt your credit score which could be substantial. Even if you don’t want to use your cards much anymore, you can bill them for a streaming service each month and set up automatic payments so you don’t have to worry about debt, but can still build a credit file that can open doors. for you in the future.

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These 4 measurements indicate that ALPEK. de (BMV: ALPEKA) uses its debt reasonably well https://atrx.net/these-4-measurements-indicate-that-alpek-de-bmv-alpeka-uses-its-debt-reasonably-well/ Thu, 05 May 2022 12:41:12 +0000 https://atrx.net/these-4-measurements-indicate-that-alpek-de-bmv-alpeka-uses-its-debt-reasonably-well/ Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness […]]]>

Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. When we think of a company’s risk, we always like to look at its use of debt, because over-indebtedness can lead to ruin. We can see that ALPEK, SAB de CV (BMV: ALPEKA) uses debt in its business. But the more important question is: what risk does this debt create?

What risk does debt carry?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own cash flow. If things go really bad, lenders can take over the business. However, a more frequent (but still costly) event is when a company has to issue shares at bargain prices, permanently diluting shareholders, just to shore up its balance sheet. That said, the most common situation is when a company manages its debt reasonably well – and to its own benefit. The first step when considering a company’s debt levels is to consider its cash and debt together.

See our latest analysis for ALPEK. of

What is ALPEK. net debt?

As you can see below, ALPEK. de had a debt of 30.9 billion Mexican pesos in March 2022, roughly the same as the previous year. You can click on the graph for more details. However, he also had 8.35 billion pesos in cash, so his net debt is 22.5 billion pesos.

BMV:ALPEK A Debt to Equity History May 5, 2022

How strong is ALPEK. Balance sheet of?

We can see in the most recent balance sheet that ALPEK. de had liabilities of 35.9 billion pesos maturing within one year and liabilities of 37.9 billion pesos due beyond. In return, it had 8.35 billion pesos in cash and 26.6 billion pesos in debt due within 12 months. Thus, its liabilities outweigh the sum of its cash and (short-term) receivables of 38.9 billion Mexican pesos.

This is a mountain of leverage compared to its market capitalization of 58.0 billion Mexican pesos. This suggests shareholders would be heavily diluted if the company needed to shore up its balance sheet quickly.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

ALPEK. de has a low net debt to EBITDA ratio of just 0.91. And its EBIT easily covers its interest charges, being 14.5 times higher. One could therefore say that he is no more threatened by his debt than an elephant is by a mouse. On top of that, ALPEK. de has grown its EBIT by 94% over the last twelve months, and this growth will make it easier to manage its debt. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the company’s future profitability will decide whether ALPEK. can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, while the taxman may love accounting profits, lenders only accept cash. We therefore always check how much of this EBIT is converted into free cash flow. Over the past three years, ALPEK. de produced strong free cash flow equivalent to 66% of its EBIT, which is what we expected. This free cash flow puts the company in a good position to repay its debt, should it arise.

Our point of view

The good news is that ALPEK. De’s demonstrated ability to cover its interest costs with its EBIT delights us like a fluffy puppy does a toddler. But truth be told, we think his total passive level undermines that impression a bit. When we consider the range of factors above, it looks like ALPEK. de is quite reasonable with its use of debt. While this carries some risk, it can also improve shareholder returns. When analyzing debt levels, the balance sheet is the obvious starting point. But at the end of the day, every business can contain risks that exist outside of the balance sheet. Know that ALPEK. watch 3 warning signs in our investment analysis and 1 of them is a little unpleasant…

In the end, sometimes it’s easier to focus on companies that don’t even need to take on debt. Readers can access a list of growth stocks with no net debt 100% freeright now.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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With interest rates rising, it’s time to focus on MANG stocks instead of FAANG, says Jefferies https://atrx.net/with-interest-rates-rising-its-time-to-focus-on-mang-stocks-instead-of-faang-says-jefferies/ Tue, 03 May 2022 15:15:00 +0000 https://atrx.net/with-interest-rates-rising-its-time-to-focus-on-mang-stocks-instead-of-faang-says-jefferies/ Ahead of the Federal Open Market Committee policy meeting, analysts at Jefferies on May 3 advised investors to steer clear of popular stock group FAANG + Microsoft. Instead, they singled out a group they named MANG. We will compare the two groups below. FAANG Group — holding Facebook Meta Platforms Inc. FB, +0.67%, Apple Inc.AAPL, […]]]>

Ahead of the Federal Open Market Committee policy meeting, analysts at Jefferies on May 3 advised investors to steer clear of popular stock group FAANG + Microsoft.

Instead, they singled out a group they named MANG. We will compare the two groups below.

FAANG Group — holding Facebook Meta Platforms Inc. FB,
+0.67%,
Apple Inc.AAPL,
+0.80%,
Amazon.com Inc. AMZN,
-0.37%,
Netflix Inc. NFLX,
+0.20%
and holding company Google Alphabet Inc. GOOG,
+0.70%

GOOGL,
+0.56%
— has been well known to investors for many years. These companies and Microsoft Corp. MSFT,
-0.94%
were at the forefront of the long bull cycle in US tech stocks. As you can see below, all are down significantly this year, but the worst performers were Netflix and Meta.

On May 3, a team of Jefferies analysts led by Sean Darby reiterated its February recommendation that investors steer clear of the FAANG + Microsoft group because the expected rise in interest rates would be particularly difficult for “long-term assets”. duration”.

Darby wrote that FAANG + Microsoft “is not a homogeneous group” and repeated his recommendation for the MANG group.

He prefers the MANG group — Microsoft, Apple, Nvidia Corp. NVDA,
-0.45%
and Alphabet – as a better basket for a rising rate environment, citing “their balance sheet, earnings yield and FCF [free cash flow] yield.”

Following the Federal Open Market Committee’s two-day policy meeting on May 3-4, the Federal Reserve is expected to raise the federal funds rate by 50 basis points to a range of 0.75% to 1.25% and announce a plan to reduce its bond holdings. Anticipating this tightening, Darby also warned investors that “the key message is patience.”

MANG vs. FAANG + MSFT

First, here’s some info on this year’s performance:

  • FAANG + Microsoft Group lost $1.4 trillion in market value in April. You can see a breakdown of the individual impairments here. That was a 15% drop in just one month. The group’s market value is down $2.21 trillion, or 22%, for the first four months of 2022.

  • MANG Group’s market value fell 14% in April and 18% in the first four months of the year.

Darby cited balance sheets, earnings yields and free cash flow yields supporting his preference for MANG Group over FAANG + Microsoft Group. That means the odd bunch is Meta Platforms, Amazon, and Netflix.

So let’s look at two sets of numbers and estimates to compare the groups, listing the MANG names first, then the other three.

Debt, Earnings Yields and Free Cash Flow Yields

For comparison, here are the latest available long-term debt to equity ratios for the group, along with earnings and free cash flow yields based on current share prices and consensus estimates for the 12 coming months, and price/earnings ratios.

Company

Teleprinter

Long-term debt/equity

Forward EPS return

Yield of forward FCF

PER before

Price Change – 2002 to May 2

Microsoft Corp.

MSFT,
-0.94%

20%

3.71%

3.50%

27.0

-15%

Apple Inc.

AAPL,
+0.80%

123%

4.03%

4.37%

24.8

-11%

Nvidia Corp.

NVDA,
-0.45%

30%

3.03%

2.81%

33.0

-34%

Alphabet Inc. Class C

7%

5.11%

5.42%

19.6

-19%

Meta Platforms Inc. Class A

fb,
+0.67%

6%

5.99%

4.38%

16.7

-37%

Amazon.com Inc.

AMZN,
-0.37%

101%

1.33%

1.29%

75.3

-25%

Netflix Inc.

NFLX,
+0.20%

173%

5.68%

1.36%

17.6

-67%

Source: FactSet

Click on the tickers to learn more about each company.

Click here for Tomi Kilgore’s detailed guide to the wealth of free information on the MarketWatch quote page.

Darby favors MANG Group in part for the strength of its balance sheet, but Apple has a high long-term debt-to-equity ratio.

The numbers clearly favor MANG Group for free cash flow returns. Meta Platforms is the exception, with the lowest leverage, highest estimated earnings yield, and second highest estimated FCF yield (after Alphabet). It also has the lowest forward price-to-earnings ratio in the group, after its share price fell 37% this year.

look further

Here are the estimated compound annual growth rates (CAGR) for the next two calendar years for sales, earnings per share and free cash flow:

Company

Estimated sales ($M) – 2022

Estimated sales ($M) – 2023

Estimated sales ($millions) – 2024

Two-Year Forecast Sales CAGR

Microsoft Corp.

$213,388

$242,622

$272,850

13.1%

Apple Inc.

$399,580

$420,378

$440,949

5.0%

Nvidia Corp.

$34,206

$40,111

$44,829

14.5%

Alphabet Inc. Class C

$298,939

$344,603

$395,114

15.0%

Meta Platforms Inc. Class A

$127,545

$148,154

$169,668

15.3%

Amazon.com Inc.

$528,437

$618,272

$714,952

16.3%

Netflix Inc.

$32,491

$35,527

$39,168

9.8%

Source: FactSet

Company

Estimated EPS – 2022

Estimated EPS – 2023

Estimated EPS – 2024

2-year expected EPS CAGR

Microsoft Corp.

$10.06

$11.71

$13.48

15.8%

Apple Inc.

$6.23

$6.63

$7.10

6.8%

Nvidia Corp.

$5.56

$6.59

$7.57

16.8%

Alphabet Inc. Class C

$112.38

$133.96

$153.66

16.9%

Meta Platforms Inc. Class A

$11.90

$14.09

$16.21

16.7%

Amazon.com Inc.

$21.56

$55.75

$89.44

103.7%

Netflix Inc.

$10.94

$12.09

$14.66

15.8%

Source: FactSet

Company

Estimated FCF per share – 2022

Estimated FCF per share – 2023

Estimated FCF per share – 2024

CAGR FCF expected over two years

Microsoft Corp.

$9.48

$11.14

N / A

N / A

Apple Inc.

$6.75

$7.32

$8.07

9.3%

Nvidia Corp.

$4.90

$6.65

$6.70

16.9%

Alphabet Inc. Class C

$118.40

$144.06

$168.20

19.2%

Meta Platforms Inc. Class A

$8.41

$10.88

$15.46

35.6%

Amazon.com Inc.

$15.11

$65.48

$131.66

195.2%

Netflix Inc.

$1.69

$4.73

$7.81

114.9%

Source: FactSet

A consensus estimate of free cash flow is not available for Microsoft for 2024. Analysts expect the company’s FCF per share to increase 18% in 2023.

What is striking about the CAGR estimates is that analysts expect very large free cash flow increases for Amazon and Netflix, through 2024.

So when might it be time to return to the less favored Meta, Amazon and Netflix?

Darby wrote: “[W]We are currently waiting for the economy to slow enough to consider acquiring 10-year Treasury stock proxies,” which include FAANG + Microsoft Group. He believes it is too early and therefore continues to favor MANG Group for the rising rate environment.

Don’t miss: These stocks soared during the pandemic and then crashed. Ten should now double in price.

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Does COSCO SHIPPING Energy Transportation (HKG:1138) have a healthy balance sheet? https://atrx.net/does-cosco-shipping-energy-transportation-hkg1138-have-a-healthy-balance-sheet/ Mon, 02 May 2022 00:16:14 +0000 https://atrx.net/does-cosco-shipping-energy-transportation-hkg1138-have-a-healthy-balance-sheet/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We note that COSCO SHIPPING Energy Transportation Co., Ltd. (HKG:1138) has a debt on its balance sheet. But should shareholders worry about its use of debt?

When is debt dangerous?

Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. If things go really bad, lenders can take over the business. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we look at debt levels, we first consider cash and debt levels, together.

Check out our latest analysis for COSCO SHIPPING Energy Transportation

What is COSCO SHIPPING Energy Transportation’s debt?

The graph below, which you can click on for more details, shows that COSCO SHIPPING Energy Transportation had a debt of 23.4 billion yen in December 2021; about the same as the previous year. However, he also had 3.52 billion Canadian yen in cash, so his net debt is 19.9 billion domestic yen.

SEHK: 1138 Historical Debt to Equity May 2, 2022

How strong is COSCO SHIPPING Energy Transportation’s balance sheet?

We can see from the most recent balance sheet that COSCO SHIPPING Energy Transportation had liabilities of 13.3 billion yen due in one year, and liabilities of 16.1 billion yen due beyond. In compensation for these obligations, it had cash of 3.52 billion yen as well as receivables valued at 1.41 billion yen due within 12 months. It therefore has liabilities totaling 24.5 billion Canadian yen more than its cash and short-term receivables, combined.

This deficit is considerable compared to its market capitalization of 31.9 billion Canadian yen, so it suggests that shareholders monitor the use of debt by COSCO SHIPPING Energy Transportation. If its lenders asked it to shore up its balance sheet, shareholders would likely face significant dilution.

We use two main ratios to inform us about debt to earnings levels. The first is net debt divided by earnings before interest, taxes, depreciation and amortization (EBITDA), while the second is how often its earnings before interest and taxes (EBIT) covers its interest expense (or its interests, for short). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

In this case, COSCO SHIPPING Energy Transportation has a rather concerning net debt to EBITDA ratio of 7.1, but very high interest coverage of 1k. This means that unless the company has access to very cheap debt, these interest charges will likely increase in the future. Importantly, COSCO SHIPPING Energy Transportation’s EBIT has fallen by 94% in the last twelve months. If this earnings trend continues, paying off debt will be about as easy as herding cats on a roller coaster. When analyzing debt levels, the balance sheet is the obvious starting point. But it is future earnings, more than anything, that will determine COSCO SHIPPING Energy Transportation’s ability to maintain a healthy balance sheet in the future. So if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.

Finally, a company can only repay its debts with cold hard cash, not with book profits. So the logical step is to look at what proportion of that EBIT is actual free cash flow. Fortunately for all shareholders, COSCO SHIPPING Energy Transportation has actually produced more free cash flow than EBIT for the past three years. There’s nothing better than incoming money to stay in the good books of your lenders.

Our point of view

We feel some apprehension about COSCO SHIPPING Energy Transportation’s challenging EBIT growth rate, but we also have some positives to focus on. Interest coverage and the conversion of EBIT to free cash flow were encouraging signs. Considering the above factors, we believe COSCO SHIPPING Energy Transportation’s debt poses certain risks to the business. So even if this leverage increases return on equity, we wouldn’t really want to see it increase from now on. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. We have identified 2 warning signs with COSCO SHIPPING Energy Transportation (at least 1 that should not be ignored), and understanding them should be part of your investment process.

In the end, it’s often best to focus on companies that aren’t in debt. You can access our special list of these companies (all with a track record of earnings growth). It’s free.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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