Bed Bath Bonds

BBBY
 Stock
  

USD 3.61  0.01  0.28%   

Bed Bath's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Bed Bath's financial risk is the risk to Bed Bath stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Continue to the analysis of Bed Bath Fundamentals Over Time.
  
Bed Bath Total Debt is fairly stable at the moment as compared to the past year. Bed Bath reported Total Debt of 3.03 Billion in 2021. Debt Current is likely to rise to about 426.1 M in 2022, whereas Long Term Debt to Equity is likely to drop 4.01 in 2022.
Given the importance of Bed Bath's capital structure, the first step in the capital decision process is for the management of Bed Bath 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 Bed Bath Beyond to issue bonds at a reasonable cost.

Bed Bath Bond Ratings

Bed Bath Beyond bond ratings play a critical role in determining how much Bed Bath 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 Bed Bath's borrowing costs.
Piotroski F Score
6  Healthy
Beneish M Score

Bed Bath Beyond Debt to Cash Allocation

As Bed Bath Beyond follows its natural business cycle, the capital allocation decisions will not magically go away. Bed Bath'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. Many companies 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.
The company currently holds 1.18 B in liabilities. Bed Bath Beyond has a current ratio of 1.02, suggesting that it is in a questionable position to pay out its financial obligations when due. Debt can assist Bed Bath until it has trouble settling it off, either with new capital or with free cash flow. So, Bed Bath's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Bed Bath Beyond sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Bed Bath to invest in growth at high rates of return. When we think about Bed Bath's use of debt, we should always consider it together with cash and equity.

Bed Bath Inventories Over Time

Bed Bath Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Bed Bath 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.

Bed Bath Debt Ratio

    
  52.66   
It appears slightly above 47% of Bed Bath's assets are financed be debt. 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 Bed Bath's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Bed Bath, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a Bed Bath debt ratio should be compared their industry average or other competing firms.
Share Download
Share Download

Bed Bath Corporate Bonds Issued

Bed Bath 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. Bed Bath Beyond 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. Most Bed Bath bonds can be classified according to their maturity, which is the date when Bed Bath Beyond 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.

Bed Bath Beyond Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Bed Bath, understanding its historical liability is critical in projecting Bed Bath's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how Bed Bath uses its financing power over time.
In order to fund their growth, businesses such as Bed Bath widely use Financial Leverage. For most companies, financial capital is raised by issuing debt securities and by selling common stock. The debt and equity that make up Bed Bath's capital structure have many risks and return implications. Leverage is an investment strategy of using borrowed money to increase the potential return of an investment. Please note, 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.

Understaning Bed Bath Use of Financial Leverage

Bed Bath financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Bed Bath's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Bed Bath assets, the company is considered highly leveraged. Understanding the composition and structure of overall Bed Bath debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it.
Last ReportedProjected for 2022
Total DebtB3.6 B
Debt Current346.5 M426.1 M
Debt Non Current2.7 B3.2 B
Issuance Repayment of Debt Securities-12.4 M777.6 M
Long Term Debt to Equity 6.77  4.01 
Debt to Equity Ratio 6.77  4.01 
Please read more on our technical analysis page.

Be your own money manager

Our tools can tell you how much better you can do entering a position in Bed Bath without increasing your portfolio risk or giving up the expected return. As an individual investor, you need to find a reliable way to track all your investment portfolios. However, your requirements will often be based on how much of the process you decide to do yourself. In addition to allowing all investors analytical transparency into all their portfolios, our tools can evaluate risk-adjusted returns of your individual positions relative to your overall portfolio.

Did you try this?

Run Companies Directory Now

   

Companies Directory

Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
All  Next Launch Module

Pair Trading with Bed Bath

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Bed Bath position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bed Bath will appreciate offsetting losses from the drop in the long position's value.

Moving together with Bed Bath

+0.89PRTYParty City Holdco Aggressive PushPairCorr
+0.75WSMWilliams-Sonoma Normal TradingPairCorr

Moving against Bed Bath

-0.68FCXFreeport-McMoran Copper Potential GrowthPairCorr
-0.6CAKEThe Cheesecake Factory Normal TradingPairCorr
-0.54GPIGroup 1 Automotive Normal TradingPairCorr
-0.52MLCOMelco Resorts Entert Upward RallyPairCorr
The ability to find closely correlated positions to Bed Bath could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Bed Bath when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Bed Bath - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Bed Bath Beyond to buy it.
The correlation of Bed Bath is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Bed Bath moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Bed Bath Beyond moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Bed Bath can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Continue to the analysis of Bed Bath Fundamentals Over Time. Note that the Bed Bath Beyond information on this page should be used as a complementary analysis to other Bed Bath's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

Complementary Tools for Bed Bath Stock analysis

When running Bed Bath Beyond price analysis, check to measure Bed Bath's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Bed Bath is operating at the current time. Most of Bed Bath's value examination focuses on studying past and present price action to predict the probability of Bed Bath's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Bed Bath's price. Additionally, you may evaluate how the addition of Bed Bath to your portfolios can decrease your overall portfolio volatility.
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Is Bed Bath's industry 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 Bed Bath. If investors know Bed Bath 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 Bed Bath listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Market Capitalization
422.3 M
Quarterly Revenue Growth YOY
(0.28) 
Return On Assets
(0.08) 
Return On Equity
(6.50) 
The market value of Bed Bath Beyond is measured differently than its book value, which is the value of Bed Bath that is recorded on the company's balance sheet. Investors also form their own opinion of Bed Bath's value that differs from its market value or its book value, called intrinsic value, which is Bed Bath'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 Bed Bath's market value can be influenced by many factors that don't directly affect Bed Bath'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 Bed Bath's value and its price as these two are different measures arrived at by different means. Investors typically determine Bed Bath value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Bed Bath'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.