CVS Corp Bonds

CVS
 Stock
  

USD 106.27  1.35  1.29%   

CVS Corp'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. CVS Corp's financial risk is the risk to CVS Corp 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 CVS Corp Fundamentals Over Time.
  
As of 08/18/2022, Total Debt is likely to drop to about 63.8 B. In addition to that, Debt Current is likely to drop to about 4.7 B

CVS Corp Current Financial Burden

CVS Corp'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. CVS Corp'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 CVS Corp Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect CVS Corp's stakeholders.

Asset vs Debt

Equity vs Debt

For most companies, including CVS Corp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running CVS Corp the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book
1.82
Book Value
57.31
Operating Margin
0.0471
Profit Margin
0.0266
Return On Assets
0.0391
Return On Equity
0.11
Given that CVS Corp'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 CVS Corp 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 CVS Corp to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, CVS Corp is said to be less leveraged. If creditors hold a majority of CVS Corp's assets, the company is said to be highly leveraged.

CVS Corp Quarterly Debt to Equity Ratio

2.059

Given the importance of CVS Corp's capital structure, the first step in the capital decision process is for the management of CVS Corp 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 CVS Corp to issue bonds at a reasonable cost.

CVS Corp Bond Ratings

CVS Corp bond ratings play a critical role in determining how much CVS Corp 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 CVS Corp's borrowing costs.
Piotroski F Score
8  Strong
Beneish M Score

CVS Corp Debt to Cash Allocation

As CVS Corp follows its natural business cycle, the capital allocation decisions will not magically go away. CVS Corp'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 has 75.92 B in debt with debt to equity (D/E) ratio of 1.02, which is OK given its current industry classification. CVS Corp has a current ratio of 0.86, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist CVS Corp until it has trouble settling it off, either with new capital or with free cash flow. So, CVS Corp'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 CVS Corp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for CVS Corp to invest in growth at high rates of return. When we think about CVS Corp's use of debt, we should always consider it together with cash and equity.

CVS Corp Inventories Over Time

CVS Corp Assets Financed by Debt

The debt-to-assets ratio shows the degree to which CVS Corp 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.

CVS Corp Debt Ratio

    
  32.13   
It seems slightly above 67% of CVS Corp'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 CVS Corp's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of CVS Corp, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a CVS Corp debt ratio should be compared their industry average or other competing firms.
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CVS Corp Corporate Bonds Issued

CVS Corp 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. CVS Corp 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 CVS Corp bonds can be classified according to their maturity, which is the date when CVS Corp 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.

CVS Corp Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of CVS Corp, understanding its historical liability is critical in projecting CVS Corp'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 CVS Corp uses its financing power over time.
In order to fund their growth, businesses such as CVS Corp 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 CVS Corp'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 CVS Corp Use of Financial Leverage

CVS Corp financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures CVS Corp'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 CVS Corp assets, the company is considered highly leveraged. Understanding the composition and structure of overall CVS Corp 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 Debt76 B63.8 B
Debt Current5.9 B4.7 B
Debt Non Current70.1 B59 B
Issuance Repayment of Debt Securities-9.3 B-9.5 B
Long Term Debt to Equity 0.69  0.61 
Debt to Equity Ratio 2.10  2.01 
CVS Health Corporation provides health services in the United States. CVS Health Corporation was founded in 1963 and is headquartered in Woonsocket, Rhode Island. CVS Corp operates under Healthcare Plans classification in the United States and is traded on New York Stock Exchange. It employs 216000 people.
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CVS Corp Implied Volatility

    
  25.41  
CVS Corp's implied volatility exposes the market's sentiment of CVS Corp stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if CVS Corp's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that CVS Corp stock will not fluctuate a lot when CVS Corp's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards CVS Corp in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, CVS Corp's short interest history, or implied volatility extrapolated from CVS Corp options trading.

Pair Trading with CVS Corp

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 CVS Corp 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 CVS Corp will appreciate offsetting losses from the drop in the long position's value.

Moving together with CVS Corp

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Moving against CVS Corp

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The ability to find closely correlated positions to CVS Corp could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace CVS Corp 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 CVS Corp - 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 CVS Corp to buy it.
The correlation of CVS Corp 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 CVS Corp moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if CVS Corp 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 CVS Corp 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 CVS Corp Fundamentals Over Time. Note that the CVS Corp information on this page should be used as a complementary analysis to other CVS Corp'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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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When running CVS Corp price analysis, check to measure CVS Corp'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 CVS Corp is operating at the current time. Most of CVS Corp's value examination focuses on studying past and present price action to predict the probability of CVS Corp's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move CVS Corp's price. Additionally, you may evaluate how the addition of CVS Corp to your portfolios can decrease your overall portfolio volatility.
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Is CVS Corp'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 CVS Corp. If investors know CVS Corp 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 CVS Corp 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 YOY
0.062
Market Capitalization
139.7 B
Quarterly Revenue Growth YOY
0.11
Return On Assets
0.0391
Return On Equity
0.11
The market value of CVS Corp is measured differently than its book value, which is the value of CVS Corp that is recorded on the company's balance sheet. Investors also form their own opinion of CVS Corp's value that differs from its market value or its book value, called intrinsic value, which is CVS Corp'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 CVS Corp's market value can be influenced by many factors that don't directly affect CVS Corp'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 CVS Corp's value and its price as these two are different measures arrived at by different means. Investors typically determine CVS Corp value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, CVS Corp'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.