CompoSecure Corporate Bonds and Leverage Analysis
| CMPO Stock | USD 16.17 0.02 0.12% |
At this time, CompoSecure's Short and Long Term Debt is very stable compared to the past year. As of the 29th of November 2024, Short Term Debt is likely to grow to about 12.9 M, while Short and Long Term Debt Total is likely to drop about 327.2 M. With a high degree of financial leverage come high-interest payments, which usually reduce CompoSecure's Earnings Per Share (EPS).
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 1.67366856 | Current Value 2.5 | Quarterly Volatility 0.63118488 |
CompoSecure |
Given the importance of CompoSecure's capital structure, the first step in the capital decision process is for the management of CompoSecure 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 CompoSecure to issue bonds at a reasonable cost.
CompoSecure Bond Ratings
CompoSecure financial ratings play a critical role in determining how much CompoSecure 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 CompoSecure's borrowing costs.| Piotroski F Score | 6 | Healthy | View |
| Beneish M Score | (2.51) | Unlikely Manipulator | View |
CompoSecure Debt to Cash Allocation
As CompoSecure follows its natural business cycle, the capital allocation decisions will not magically go away. CompoSecure'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.
CompoSecure currently holds 344.64 M in liabilities. CompoSecure has a current ratio of 2.25, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about CompoSecure's use of debt, we should always consider it together with its cash and equity.CompoSecure Total Current Liabilities Over Time
CompoSecure Assets Financed by Debt
The debt-to-assets ratio shows the degree to which CompoSecure 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.CompoSecure Debt Ratio | 250.0 |
CompoSecure Corporate Bonds Issued
CompoSecure Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning CompoSecure Use of Financial Leverage
Leverage ratios show CompoSecure's total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of CompoSecure's financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 344.6 M | 327.2 M | |
| Net Debt | 303.4 M | 301.4 M | |
| Long Term Debt | 326.2 M | 306.8 M | |
| Short and Long Term Debt | 10.3 M | 12 M | |
| Short Term Debt | 12.3 M | 12.9 M | |
| Long Term Debt Total | 309.3 M | 287.7 M | |
| Net Debt To EBITDA | 1.96 | 1.87 | |
| Debt To Equity | (0.42) | (0.44) | |
| Interest Debt Per Share | 19.59 | 14.26 | |
| Debt To Assets | 1.67 | 2.50 | |
| Long Term Debt To Capitalization | (0.68) | (0.65) | |
| Total Debt To Capitalization | (0.72) | (0.76) | |
| Debt Equity Ratio | (0.42) | (0.44) | |
| Debt Ratio | 1.67 | 2.50 | |
| Cash Flow To Debt Ratio | 0.31 | 0.39 |
Pair Trading with CompoSecure
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if CompoSecure position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CompoSecure will appreciate offsetting losses from the drop in the long position's value.Moving together with CompoSecure Stock
Moving against CompoSecure Stock
| 0.71 | IIIN | Insteel Industries | PairCorr |
| 0.7 | WOR | Worthington Industries | PairCorr |
| 0.41 | LQMT | Liquidmetal Technologies | PairCorr |
The ability to find closely correlated positions to CompoSecure could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace CompoSecure when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back CompoSecure - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling CompoSecure to buy it.
The correlation of CompoSecure is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as CompoSecure moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if CompoSecure moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for CompoSecure can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of CompoSecure Fundamentals Over Time. To learn how to invest in CompoSecure Stock, please use our How to Invest in CompoSecure guide.You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Is Industrial Machinery & Supplies & 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 CompoSecure. If investors know CompoSecure 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 CompoSecure 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 0.105 | Earnings Share (0.41) | Revenue Per Share 16.184 | Quarterly Revenue Growth 0.106 | Return On Assets 0.2705 |
The market value of CompoSecure is measured differently than its book value, which is the value of CompoSecure that is recorded on the company's balance sheet. Investors also form their own opinion of CompoSecure's value that differs from its market value or its book value, called intrinsic value, which is CompoSecure'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 CompoSecure's market value can be influenced by many factors that don't directly affect CompoSecure'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 CompoSecure's value and its price as these two are different measures arrived at by different means. Investors typically determine if CompoSecure is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, CompoSecure'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.