Empire State Realty Corporate Bonds and Leverage Analysis
| ESBA Stock | USD 10.88 0.23 2.07% |
Empire State Realty holds a debt-to-equity ratio of 1.388. At present, Empire State's Short Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Net Debt To EBITDA is expected to grow to 6.28, whereas Short and Long Term Debt Total is forecasted to decline to about 1.8 B. With a high degree of financial leverage come high-interest payments, which usually reduce Empire State's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Empire State'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. Empire State'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 Empire Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Empire State's stakeholders.
For most companies, including Empire State, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Empire State Realty, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Empire State'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 1.6439 | Book Value 10.658 | Operating Margin 0.2328 | Profit Margin 0.114 | Return On Assets 0.0212 |
Empire |
Given the importance of Empire State's capital structure, the first step in the capital decision process is for the management of Empire State 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 Empire State Realty to issue bonds at a reasonable cost.
Empire State Bond Ratings
Empire State Realty financial ratings play a critical role in determining how much Empire State 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 Empire State's borrowing costs.| Piotroski F Score | 8 | Strong | View |
| Beneish M Score | (2.88) | Unlikely Manipulator | View |
Empire State Realty Debt to Cash Allocation
As Empire State Realty follows its natural business cycle, the capital allocation decisions will not magically go away. Empire State'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.
Empire State Realty currently holds 2.27 B in liabilities with Debt to Equity (D/E) ratio of 1.39, which is about average as compared to similar companies. Empire State Realty has a current ratio of 5.46, suggesting that it is liquid enough and is able to pay its financial obligations when due. Note, when we think about Empire State's use of debt, we should always consider it together with its cash and equity.Empire State Common Stock Shares Outstanding Over Time
Empire State Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Empire State 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.Empire State Debt Ratio | 68.0 |
Empire State Corporate Bonds Issued
Most Empire bonds can be classified according to their maturity, which is the date when Empire State Realty 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.
Empire Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Empire State Use of Financial Leverage
Empire State's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Empire State's total debt position, including all outstanding debt obligations, and compares it with Empire State's equity. Financial leverage can amplify the potential profits to Empire State's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Empire State is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 2.3 B | 1.8 B | |
| Net Debt | 1.9 B | 1.5 B | |
| Long Term Debt | 2.2 B | 1.9 B | |
| Short Term Debt | 86.5 M | 97.1 M | |
| Long Term Debt Total | 2.7 B | 1.8 B | |
| Short and Long Term Debt | 389.3 M | 369.8 M | |
| Net Debt To EBITDA | 5.71 | 6.28 | |
| Debt To Equity | 2.27 | 2.39 | |
| Interest Debt Per Share | 14.54 | 10.23 | |
| Debt To Assets | 0.53 | 0.68 | |
| Long Term Debt To Capitalization | 0.69 | 0.73 | |
| Total Debt To Capitalization | 0.69 | 0.74 | |
| Debt Equity Ratio | 2.27 | 2.39 | |
| Debt Ratio | 0.53 | 0.68 | |
| Cash Flow To Debt Ratio | 0.10 | 0.07 |
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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 Empire State Realty is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Empire Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Empire State Realty Stock. Highlighted below are key reports to facilitate an investment decision about Empire State Realty Stock:Check out the analysis of Empire State Fundamentals Over Time. You can also try the Stocks Directory module to find actively traded stocks across global markets.
Is Diversified REITs 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 Empire State. If investors know Empire 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 Empire State 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 0.143 | Dividend Share 0.14 | Earnings Share 0.27 | Revenue Per Share 3.092 | Quarterly Revenue Growth 0.017 |
The market value of Empire State Realty is measured differently than its book value, which is the value of Empire that is recorded on the company's balance sheet. Investors also form their own opinion of Empire State's value that differs from its market value or its book value, called intrinsic value, which is Empire State'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 Empire State's market value can be influenced by many factors that don't directly affect Empire State'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 Empire State's value and its price as these two are different measures arrived at by different means. Investors typically determine if Empire State is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Empire State'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.