Eagle Point Current Debt

ECCF Stock   24.87  0.04  0.16%   
At this time, Eagle Point's Debt To Equity is most likely to slightly decrease in the upcoming years. The Eagle Point's current Debt To Assets is estimated to increase to 0.29, while Interest Debt Per Share is projected to decrease to 2.69. . Eagle Point's financial risk is the risk to Eagle Point stockholders that is caused by an increase in debt.
 
Debt Ratio  
First Reported
2010-12-31
Previous Quarter
0.25
Current Value
0.29
Quarterly Volatility
0.03164787
 
Credit Downgrade
 
Yuan Drop
 
Covid
Given that Eagle Point's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Eagle Point is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Eagle Point to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Eagle Point is said to be less leveraged. If creditors hold a majority of Eagle Point's assets, the Company is said to be highly leveraged.
  
Check out the analysis of Eagle Point Fundamentals Over Time.

Eagle Point Financial Rating

Eagle Point Credit financial ratings play a critical role in determining how much Eagle Point 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 Eagle Point's borrowing costs.
Piotroski F Score
6
HealthyView
Beneish M Score
(3.62)
Unlikely ManipulatorView

Eagle Point Total Assets Over Time

Eagle Point Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Eagle Point 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.

Eagle Point Debt Ratio

    
  29.0   
It seems as most of the Eagle Point's assets are financed through equity. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Eagle Point's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Eagle Point, which in turn will lower the firm's financial flexibility.

Eagle Net Debt

Net Debt

115.51 Million

At this time, Eagle Point's Net Debt is most likely to increase significantly in the upcoming years.

Understaning Eagle Point Use of Financial Leverage

Eagle Point's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Eagle Point's total debt position, including all outstanding debt obligations, and compares it with Eagle Point's equity. Financial leverage can amplify the potential profits to Eagle Point's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Eagle Point is unable to cover its debt costs.
Last ReportedProjected for Next Year
Net Debt111.3 M115.5 M
Net Debt To EBITDA 0.84  0.88 
Debt To Equity 0.32  0.35 
Interest Debt Per Share 2.84  2.69 
Debt To Assets 0.25  0.29 
Long Term Debt To Capitalization 0.25  0.26 
Total Debt To Capitalization 0.25  0.26 
Debt Equity Ratio 0.32  0.35 
Debt Ratio 0.25  0.29 
Cash Flow To Debt Ratio(0.36)(0.38)
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Currently Active Assets on Macroaxis

When determining whether Eagle Point Credit offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Eagle Point'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 Eagle Point Credit Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Eagle Point Credit Stock:
Check out the analysis of Eagle Point Fundamentals Over Time.
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Is Asset Management 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 Eagle Point. If investors know Eagle 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 Eagle Point listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Eagle Point Credit is measured differently than its book value, which is the value of Eagle that is recorded on the company's balance sheet. Investors also form their own opinion of Eagle Point's value that differs from its market value or its book value, called intrinsic value, which is Eagle Point'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 Eagle Point's market value can be influenced by many factors that don't directly affect Eagle Point'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 Eagle Point's value and its price as these two are different measures arrived at by different means. Investors typically determine if Eagle Point is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Eagle Point'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.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.