Bancorp Corporate Bonds and Leverage Analysis

TBBK Stock  USD 57.56  0.68  1.20%   
Bancorp has over 147.82 Million in debt which may indicate that it relies heavily on debt financing. At this time, Bancorp's Debt To Assets are quite stable compared to the past year. Total Debt To Capitalization is expected to rise to 0.22 this year, although the value of Interest Debt Per Share will most likely fall to 4.14. . Bancorp's financial risk is the risk to Bancorp stockholders that is caused by an increase in debt.

Asset vs Debt

Equity vs Debt

Bancorp'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. Bancorp'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 Bancorp Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Bancorp's stakeholders.
For most companies, including Bancorp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for The Bancorp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Bancorp'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
3.3839
Book Value
16.905
Operating Margin
0.5715
Profit Margin
0.4357
Return On Assets
0.0264
At this time, Bancorp's Total Current Liabilities is quite stable compared to the past year. Non Current Liabilities Total is expected to rise to about 7.2 B this year, although the value of Liabilities And Stockholders Equity will most likely fall to about 3.9 B.
  
Check out the analysis of Bancorp Fundamentals Over Time.
View Bond Profile
Given the importance of Bancorp's capital structure, the first step in the capital decision process is for the management of Bancorp 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 The Bancorp to issue bonds at a reasonable cost.

Bancorp Bond Ratings

The Bancorp financial ratings play a critical role in determining how much Bancorp 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 Bancorp's borrowing costs.
Piotroski F Score
4
PoorView
Beneish M Score
(2.82)
Unlikely ManipulatorView

Bancorp Debt to Cash Allocation

The Bancorp currently holds 147.82 M in liabilities with Debt to Equity (D/E) ratio of 13.89, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations. Note, when we think about Bancorp's use of debt, we should always consider it together with its cash and equity.

Bancorp Total Assets Over Time

Bancorp Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Bancorp 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.

Bancorp Debt Ratio

    
  3.19   
It seems most of the Bancorp'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 Bancorp's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Bancorp, which in turn will lower the firm's financial flexibility.

Bancorp Corporate Bonds Issued

Bancorp issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Bancorp uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.

Bancorp Net Debt

Net Debt

150.2 Million

At this time, Bancorp's Net Debt is quite stable compared to the past year.

Understaning Bancorp Use of Financial Leverage

Leverage ratios show Bancorp's 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 Bancorp's 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 ReportedProjected for Next Year
Net Debt143 M150.2 M
Short and Long Term Debt Total147.8 M166.8 M
Long Term Debt147.8 M155.2 M
Short Term Debt37.8 K35.9 K
Long Term Debt Total49 M72.8 M
Net Debt To EBITDA(4.86)(5.10)
Debt To Equity 0.18  0.31 
Interest Debt Per Share 5.56  4.14 
Debt To Assets 0.02  0.03 
Long Term Debt To Capitalization 0.15  0.10 
Total Debt To Capitalization 0.15  0.22 
Debt Equity Ratio 0.18  0.31 
Debt Ratio 0.02  0.03 
Cash Flow To Debt Ratio 1.26  1.33 
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When determining whether Bancorp 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 Bancorp 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 The Bancorp Stock. Highlighted below are key reports to facilitate an investment decision about The Bancorp Stock:
Check out the analysis of Bancorp Fundamentals Over Time.
You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Is Regional Banks 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 Bancorp. If investors know Bancorp 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 Bancorp 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
0.13
Earnings Share
3.96
Revenue Per Share
9.168
Quarterly Revenue Growth
0.075
Return On Assets
0.0264
The market value of Bancorp is measured differently than its book value, which is the value of Bancorp that is recorded on the company's balance sheet. Investors also form their own opinion of Bancorp's value that differs from its market value or its book value, called intrinsic value, which is Bancorp'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 Bancorp's market value can be influenced by many factors that don't directly affect Bancorp'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 Bancorp's value and its price as these two are different measures arrived at by different means. Investors typically determine if Bancorp is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Bancorp'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.