Mesa Air Group Corporate Bonds and Leverage Analysis
| MESA Stock | USD 1.12 0.10 9.80% |
Mesa Air Group holds a debt-to-equity ratio of 1.591. At present, Mesa Air's Long Term Debt is projected to decrease significantly based on the last few years of reporting. The current year's Long Term Debt Total is expected to grow to about 529.1 M, whereas Short and Long Term Debt Total is forecasted to decline to about 493.7 M. With a high degree of financial leverage come high-interest payments, which usually reduce Mesa Air's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Mesa Air'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. Mesa Air'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 Mesa Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Mesa Air's stakeholders.
For most companies, including Mesa Air, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Mesa Air Group, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Mesa Air'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 0.3124 | Book Value 3.265 | Operating Margin (0.01) | Profit Margin (0.20) | Return On Assets (0.01) |
Mesa |
Given the importance of Mesa Air's capital structure, the first step in the capital decision process is for the management of Mesa Air 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 Mesa Air Group to issue bonds at a reasonable cost.
Mesa Air Bond Ratings
Mesa Air Group financial ratings play a critical role in determining how much Mesa Air 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 Mesa Air's borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (2.36) | Unlikely Manipulator | View |
Mesa Air Group Debt to Cash Allocation
As Mesa Air Group follows its natural business cycle, the capital allocation decisions will not magically go away. Mesa Air'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.
Mesa Air Group currently holds 541.01 M in liabilities with Debt to Equity (D/E) ratio of 1.59, which is about average as compared to similar companies. Mesa Air Group has a current ratio of 0.39, indicating that it has a negative working capital and may not be able to pay financial obligations when due. Note, when we think about Mesa Air's use of debt, we should always consider it together with its cash and equity.Mesa Air Total Assets Over Time
Mesa Air Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Mesa Air 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.Mesa Air Debt Ratio | 39.0 |
Mesa Air Corporate Bonds Issued
Most Mesa bonds can be classified according to their maturity, which is the date when Mesa Air Group 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.
Mesa Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Mesa Air Use of Financial Leverage
Mesa Air's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Mesa Air's total debt position, including all outstanding debt obligations, and compares it with Mesa Air's equity. Financial leverage can amplify the potential profits to Mesa Air's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Mesa Air is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 622.2 M | 493.7 M | |
| Net Debt | 584.3 M | 421.8 M | |
| Short Term Debt | 192.2 M | 99.5 M | |
| Long Term Debt | 328.3 M | 478.1 M | |
| Short and Long Term Debt | 188.1 M | 147.5 M | |
| Long Term Debt Total | 452.3 M | 529.1 M | |
| Net Debt To EBITDA | (31.45) | (29.87) | |
| Debt To Equity | 2.38 | 1.83 | |
| Interest Debt Per Share | 13.19 | 15.49 | |
| Debt To Assets | 0.53 | 0.39 | |
| Long Term Debt To Capitalization | 0.58 | 0.46 | |
| Total Debt To Capitalization | 0.65 | 0.50 | |
| Debt Equity Ratio | 2.38 | 1.83 | |
| Debt Ratio | 0.53 | 0.39 | |
| Cash Flow To Debt Ratio | (0.05) | (0.05) |
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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 Mesa Air Group offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Mesa Air'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 Mesa Air Group Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Mesa Air Group Stock:Check out the analysis of Mesa Air Fundamentals Over Time. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Is Passenger Airlines 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 Mesa Air. If investors know Mesa 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 Mesa Air 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 0.136 | Earnings Share (2.53) | Revenue Per Share 11.589 | Quarterly Revenue Growth (0.03) | Return On Assets (0.01) |
The market value of Mesa Air Group is measured differently than its book value, which is the value of Mesa that is recorded on the company's balance sheet. Investors also form their own opinion of Mesa Air's value that differs from its market value or its book value, called intrinsic value, which is Mesa Air'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 Mesa Air's market value can be influenced by many factors that don't directly affect Mesa Air'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 Mesa Air's value and its price as these two are different measures arrived at by different means. Investors typically determine if Mesa Air is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Mesa Air'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.