Badger Meter Corporate Bonds and Leverage Analysis
| BMI Stock | USD 221.00 2.11 0.96% |
Badger Meter holds a debt-to-equity ratio of 0.016. The Badger Meter's current Cash Flow To Debt Ratio is estimated to increase to 17.03, while Short and Long Term Debt Total is projected to decrease to under 5.5 M. With a high degree of financial leverage come high-interest payments, which usually reduce Badger Meter's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Badger Meter's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Badger Meter's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Badger Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Badger Meter's stakeholders.
For most companies, including Badger Meter, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Badger Meter, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Badger Meter's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 10.9945 | Book Value 20.101 | Operating Margin 0.1948 | Profit Margin 0.148 | Return On Assets 0.1262 |
Badger |
Given the importance of Badger Meter's capital structure, the first step in the capital decision process is for the management of Badger Meter to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Badger Meter to issue bonds at a reasonable cost.
Badger Meter Bond Ratings
Badger Meter financial ratings play a critical role in determining how much Badger Meter have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Badger Meter's borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (2.23) | Unlikely Manipulator | View |
Badger Meter Debt to Cash Allocation
As Badger Meter follows its natural business cycle, the capital allocation decisions will not magically go away. Badger Meter's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Badger Meter has 5.76 M in debt with debt to equity (D/E) ratio of 0.02, which may show that the company is not taking advantage of profits from borrowing. Badger Meter has a current ratio of 3.14, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Badger to invest in growth at high rates of return. Badger Meter Total Assets Over Time
Badger Meter Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Badger Meter uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Badger Meter Debt Ratio | 1.16 |
Badger Meter Corporate Bonds Issued
Most Badger bonds can be classified according to their maturity, which is the date when Badger Meter has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Badger Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Badger Meter Use of Financial Leverage
Understanding the composition and structure of Badger Meter's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Badger Meter's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 5.8 M | 5.5 M | |
| Net Debt | -186 M | -176.7 M | |
| Short Term Debt | 2.6 M | 2.4 M | |
| Short and Long Term Debt | 4 M | 3.8 M | |
| Net Debt To EBITDA | (1.27) | (1.21) | |
| Debt To Equity | 0.02 | 0.01 | |
| Interest Debt Per Share | 0.02 | 0.02 | |
| Debt To Assets | 0.01 | 0.01 | |
| Long Term Debt To Capitalization | 0.05 | 0.05 | |
| Total Debt To Capitalization | 0.02 | 0.01 | |
| Debt Equity Ratio | 0.02 | 0.01 | |
| Debt Ratio | 0.01 | 0.01 | |
| Cash Flow To Debt Ratio | 16.21 | 17.03 |
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When determining whether Badger Meter offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Badger Meter's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Badger Meter Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Badger Meter Stock:Check out the analysis of Badger Meter Fundamentals Over Time. For more detail on how to invest in Badger Stock please use our How to Invest in Badger Meter guide.You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Is Electronic Equipment, Instruments & Components space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Badger Meter. If investors know Badger will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Badger Meter listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.227 | Dividend Share 1.15 | Earnings Share 4.02 | Revenue Per Share 27.395 | Quarterly Revenue Growth 0.119 |
The market value of Badger Meter is measured differently than its book value, which is the value of Badger that is recorded on the company's balance sheet. Investors also form their own opinion of Badger Meter's value that differs from its market value or its book value, called intrinsic value, which is Badger Meter's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Badger Meter's market value can be influenced by many factors that don't directly affect Badger Meter's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Badger Meter's value and its price as these two are different measures arrived at by different means. Investors typically determine if Badger Meter is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Badger Meter's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.