OGE Energy Corporate Bonds and Leverage Analysis
| OGE Stock | USD 43.81 0.70 1.62% |
OGE Energy holds a debt-to-equity ratio of 1.168. At present, OGE Energy's Debt To Equity is projected to increase slightly based on the last few years of reporting. The current year's Interest Debt Per Share is expected to grow to 26.57, whereas Net Debt is forecasted to decline to about 2.6 B. . OGE Energy's financial risk is the risk to OGE Energy stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
OGE Energy'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. OGE Energy'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 OGE Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect OGE Energy's stakeholders.
For most companies, including OGE Energy, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for OGE Energy, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, OGE Energy'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 1.8763 | Book Value 22.977 | Operating Margin 0.3262 | Profit Margin 0.1389 | Return On Assets 0.0317 |
OGE |
Given the importance of OGE Energy's capital structure, the first step in the capital decision process is for the management of OGE Energy 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 OGE Energy to issue bonds at a reasonable cost.
OGE Energy Debt to Cash Allocation
Many companies such as OGE Energy, 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.
OGE Energy has 4.84 B in debt with debt to equity (D/E) ratio of 1.17, which is OK given its current industry classification. OGE Energy has a current ratio of 0.78, 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 OGE to invest in growth at high rates of return. OGE Energy Common Stock Shares Outstanding Over Time
OGE Energy Assets Financed by Debt
The debt-to-assets ratio shows the degree to which OGE Energy 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.OGE Energy Debt Ratio | 37.0 |
OGE Energy Corporate Bonds Issued
Most OGE bonds can be classified according to their maturity, which is the date when OGE Energy 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.
OGE Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning OGE Energy Use of Financial Leverage
OGE Energy's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures OGE Energy's total debt position, including all outstanding debt obligations, and compares it with OGE Energy's equity. Financial leverage can amplify the potential profits to OGE Energy's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if OGE Energy is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 4.8 B | 2.6 B | |
| Net Debt | 4.8 B | 2.6 B | |
| Short Term Debt | 502.9 M | 302.1 M | |
| Long Term Debt | 4.3 B | 2.7 B | |
| Short and Long Term Debt | 499.2 M | 502.8 M | |
| Long Term Debt Total | 4.1 B | 3.5 B | |
| Net Debt To EBITDA | 4.03 | 2.70 | |
| Debt To Equity | 1.07 | 1.22 | |
| Interest Debt Per Share | 25.30 | 26.57 | |
| Debt To Assets | 0.38 | 0.37 | |
| Long Term Debt To Capitalization | 0.49 | 0.54 | |
| Total Debt To Capitalization | 0.52 | 0.57 | |
| Debt Equity Ratio | 1.07 | 1.22 | |
| Debt Ratio | 0.38 | 0.37 | |
| Cash Flow To Debt Ratio | 0.25 | 0.26 |
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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 OGE Energy is a strong investment it is important to analyze OGE Energy's 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 OGE Energy's future performance. For an informed investment choice regarding OGE Stock, refer to the following important reports:Check out the analysis of OGE Energy Fundamentals Over Time. For information on how to trade OGE Stock refer to our How to Trade OGE Stock guide.You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Is Electric Utilities 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 OGE Energy. If investors know OGE 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 OGE Energy 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 (0.09) | Dividend Share 1.676 | Earnings Share 1.93 | Revenue Per Share 13.916 | Quarterly Revenue Growth 0.021 |
The market value of OGE Energy is measured differently than its book value, which is the value of OGE that is recorded on the company's balance sheet. Investors also form their own opinion of OGE Energy's value that differs from its market value or its book value, called intrinsic value, which is OGE Energy'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 OGE Energy's market value can be influenced by many factors that don't directly affect OGE Energy'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 OGE Energy's value and its price as these two are different measures arrived at by different means. Investors typically determine if OGE Energy is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, OGE Energy'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.