Enterprise Products Corporate Bonds and Leverage Analysis
| EPD Stock | USD 34.43 0.78 2.32% |
Enterprise Products holds a debt-to-equity ratio of 1.077. At present, Enterprise Products' Short and Long Term Debt is projected to decrease significantly based on the last few years of reporting. The current year's Net Debt To EBITDA is expected to grow to 4.95, whereas Net Debt is forecasted to decline to about 15.5 B. . Enterprise Products' financial risk is the risk to Enterprise Products stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Enterprise Products' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Enterprise Products' 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 Enterprise Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Enterprise Products' stakeholders.
For most companies, including Enterprise Products, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Enterprise Products Partners, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Enterprise Products' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 2.6325 | Book Value 13.078 | Operating Margin 0.124 | Profit Margin 0.1033 | Return On Assets 0.0597 |
Enterprise |
Given the importance of Enterprise Products' capital structure, the first step in the capital decision process is for the management of Enterprise Products 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 Enterprise Products Partners to issue bonds at a reasonable cost.
Enterprise Products Bond Ratings
Enterprise Products Partners financial ratings play a critical role in determining how much Enterprise Products 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 Enterprise Products' borrowing costs.| Piotroski F Score | 7 | Strong | View |
| Beneish M Score | (5.16) | Unlikely Manipulator | View |
Enterprise Products Debt to Cash Allocation
Many companies such as Enterprise Products, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Enterprise Products Partners has 29.07 B in debt with debt to equity (D/E) ratio of 1.08, which is OK given its current industry classification. Enterprise Products has a current ratio of 0.84, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Note however, debt could still be an excellent tool for Enterprise to invest in growth at high rates of return. Enterprise Products Total Assets Over Time
Enterprise Products Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Enterprise Products 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.Enterprise Products Debt Ratio | 33.0 |
Enterprise Products Corporate Bonds Issued
Most Enterprise bonds can be classified according to their maturity, which is the date when Enterprise Products Partners 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.
Enterprise Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Enterprise Products Use of Financial Leverage
Enterprise Products' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Enterprise Products' total debt position, including all outstanding debt obligations, and compares it with Enterprise Products' equity. Financial leverage can amplify the potential profits to Enterprise Products' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Enterprise Products is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 29.1 B | 15.8 B | |
| Net Debt | 28.9 B | 15.5 B | |
| Short Term Debt | 1.3 B | 1.3 B | |
| Long Term Debt | 27.4 B | 16 B | |
| Long Term Debt Total | 30.5 B | 22.5 B | |
| Short and Long Term Debt | 1.3 B | 1.5 B | |
| Net Debt To EBITDA | 3.19 | 4.95 | |
| Debt To Equity | 1.04 | 0.99 | |
| Interest Debt Per Share | 13.68 | 7.66 | |
| Debt To Assets | 0.41 | 0.33 | |
| Long Term Debt To Capitalization | 0.50 | 0.42 | |
| Total Debt To Capitalization | 0.51 | 0.44 | |
| Debt Equity Ratio | 1.04 | 0.99 | |
| Debt Ratio | 0.41 | 0.33 | |
| Cash Flow To Debt Ratio | 0.26 | 0.25 |
Also Currently Popular
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether Enterprise Products is a strong investment it is important to analyze Enterprise Products' competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Enterprise Products' future performance. For an informed investment choice regarding Enterprise Stock, refer to the following important reports:Check out the analysis of Enterprise Products Fundamentals Over Time. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Is Oil & Gas Storage & Transportation 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 Enterprise Products. If investors know Enterprise 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 Enterprise Products 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 0.076 | Dividend Share 2.08 | Earnings Share 2.66 | Revenue Per Share 26.104 | Quarterly Revenue Growth 0.148 |
The market value of Enterprise Products is measured differently than its book value, which is the value of Enterprise that is recorded on the company's balance sheet. Investors also form their own opinion of Enterprise Products' value that differs from its market value or its book value, called intrinsic value, which is Enterprise Products' 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 Enterprise Products' market value can be influenced by many factors that don't directly affect Enterprise Products' 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 Enterprise Products' value and its price as these two are different measures arrived at by different means. Investors typically determine if Enterprise Products is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Enterprise Products' 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.