WP Carey Bonds

WPC
 Stock
  

USD 78.22  0.47  0.60%   

WP Carey'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. WP Carey's financial risk is the risk to WP Carey 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).
Check out the analysis of WP Carey Fundamentals Over Time.
  
The current year Total Debt is expected to grow to about 4.4 B. The current year Issuance Repayment of Debt Securities is expected to grow to about 550.4 M

WP Carey Current Financial Burden

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

Asset vs Debt

Equity vs Debt

For most companies, including WP Carey, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running WP Carey Co 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
1.9
Book Value
42.3
Operating Margin
0.52
Profit Margin
0.35
Return On Assets
0.028
Return On Equity
0.0603
Given the importance of WP Carey's capital structure, the first step in the capital decision process is for the management of WP Carey 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 WP Carey Co to issue bonds at a reasonable cost.

WP Carey Bond Ratings

WP Carey Co bond ratings play a critical role in determining how much WP Carey 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 WP Carey's borrowing costs.
Piotroski F Score
5  Healthy
Beneish M Score

WP Carey Debt to Cash Allocation

As WP Carey Co follows its natural business cycle, the capital allocation decisions will not magically go away. WP Carey'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 7.78 B in debt with debt to equity (D/E) ratio of 0.88, which is OK given its current industry classification. WP Carey has a current ratio of 1.36, which is typical for the industry and considered as normal. Debt can assist WP Carey until it has trouble settling it off, either with new capital or with free cash flow. So, WP Carey'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 WP Carey sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for WP Carey to invest in growth at high rates of return. When we think about WP Carey's use of debt, we should always consider it together with cash and equity.

WP Carey Accounts Payable Over Time

WP Carey Assets Financed by Debt

The debt-to-assets ratio shows the degree to which WP Carey 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.

WP Carey Debt Ratio

    
  26.05   
It appears most of the WP Carey'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 WP Carey's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of WP Carey, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a WP Carey debt ratio should be compared their industry average or other competing firms.
Share Download
Share Download

WP Carey Corporate Bonds Issued

WP Carey 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. WP Carey 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 WP Carey bonds can be classified according to their maturity, which is the date when WP Carey Co 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.

WP Carey Historical Liabilities

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

WP Carey financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures WP Carey'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 WP Carey assets, the company is considered highly leveraged. Understanding the composition and structure of overall WP Carey 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 DebtB4.4 B
Issuance Repayment of Debt Securities510.2 M550.4 M
Long Term Debt to Equity 0.90  0.90 
Debt to Equity Ratio 0.90  0.90 
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 WP Carey 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 Equity Analysis Now

   

Equity Analysis

Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
All  Next Launch Module

Also Currently Popular

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.
Check out the analysis of WP Carey Fundamentals Over Time. You can also try Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

Complementary Tools for analysis

When running WP Carey price analysis, check to measure WP Carey'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 WP Carey is operating at the current time. Most of WP Carey's value examination focuses on studying past and present price action to predict the probability of WP Carey's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move WP Carey's price. Additionally, you may evaluate how the addition of WP Carey to your portfolios can decrease your overall portfolio volatility.
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Is WP Carey'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 WP Carey. If investors know WP Carey 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 WP Carey 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
(0.31) 
Market Capitalization
16.2 B
Quarterly Revenue Growth YOY
0.17
Return On Assets
0.028
Return On Equity
0.0603
The market value of WP Carey is measured differently than its book value, which is the value of WP Carey that is recorded on the company's balance sheet. Investors also form their own opinion of WP Carey's value that differs from its market value or its book value, called intrinsic value, which is WP Carey'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 WP Carey's market value can be influenced by many factors that don't directly affect WP Carey'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 WP Carey's value and its price as these two are different measures arrived at by different means. Investors typically determine WP Carey value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, WP Carey'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.