Delek Logistics Partners Corporate Bonds and Leverage Analysis
| DKL Stock | USD 40.34 0.30 0.75% |
Delek Logistics Partners holds a debt-to-equity ratio of -35.06. At this time, Delek Logistics' Interest Debt Per Share is quite stable compared to the past year. Cash Flow To Debt Ratio is expected to rise to 0.23 this year, although the value of Net Debt To EBITDA will most likely fall to 2.93. . Delek Logistics' financial risk is the risk to Delek Logistics stockholders that is caused by an increase in debt.
Debt Ratio | First Reported 2010-12-31 | Previous Quarter 1.04155285 | Current Value 0.68 | Quarterly Volatility 0.33138372 |
Delek |
Given the importance of Delek Logistics' capital structure, the first step in the capital decision process is for the management of Delek Logistics 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 Delek Logistics Partners to issue bonds at a reasonable cost.
Delek Logistics Bond Ratings
Delek Logistics Partners financial ratings play a critical role in determining how much Delek Logistics 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 Delek Logistics' borrowing costs.| Piotroski F Score | 5 | Healthy | View |
| Beneish M Score | (2.21) | Possible Manipulator | View |
Delek Logistics Partners Debt to Cash Allocation
Many companies such as Delek Logistics, 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.
Delek Logistics Partners has 1.72 B in debt. Delek Logistics Partners has a current ratio of 0.38, 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 Delek to invest in growth at high rates of return. Delek Logistics Total Assets Over Time
Delek Logistics Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Delek Logistics 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.Delek Logistics Debt Ratio | 68.0 |
Delek Logistics Corporate Bonds Issued
Delek Long Term Debt
Long Term Debt |
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Understaning Delek Logistics Use of Financial Leverage
Leverage ratios show Delek Logistics' 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 Delek Logistics' 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 | ||
| Long Term Debt | 1.7 B | 1.8 B | |
| Short and Long Term Debt Total | 1.7 B | 1.8 B | |
| Net Debt | 1.7 B | 1.8 B | |
| Short Term Debt | 43.4 M | 45.6 M | |
| Long Term Debt Total | 1.9 B | 2 B | |
| Short and Long Term Debt | 30 M | 28.5 M | |
| Net Debt To EBITDA | 4.62 | 2.93 | |
| Debt To Equity | (10.57) | (11.10) | |
| Interest Debt Per Share | 42.53 | 44.66 | |
| Debt To Assets | 1.04 | 0.68 | |
| Long Term Debt To Capitalization | 1.11 | 0.81 | |
| Total Debt To Capitalization | 1.10 | 0.76 | |
| Debt Equity Ratio | (10.57) | (11.10) | |
| Debt Ratio | 1.04 | 0.68 | |
| Cash Flow To Debt Ratio | 0.13 | 0.23 |
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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 Delek Logistics. If investors know Delek 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 Delek Logistics 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 (0.11) | Dividend Share 4.315 | Earnings Share 2.82 | Revenue Per Share 21.606 | Quarterly Revenue Growth (0.22) |
The market value of Delek Logistics Partners is measured differently than its book value, which is the value of Delek that is recorded on the company's balance sheet. Investors also form their own opinion of Delek Logistics' value that differs from its market value or its book value, called intrinsic value, which is Delek Logistics' 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 Delek Logistics' market value can be influenced by many factors that don't directly affect Delek Logistics' 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 Delek Logistics' value and its price as these two are different measures arrived at by different means. Investors typically determine if Delek Logistics is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Delek Logistics' 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.