Overseas Shipholding Current Financial Leverage
| OSG Stock | USD 6.03 0.05 0.84% |
Overseas Shipholding holds a debt-to-equity ratio of 1.713. Overseas Shipholding's financial risk is the risk to Overseas Shipholding 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).
Asset vs Debt
Equity vs Debt
Overseas Shipholding'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. Overseas Shipholding'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 Overseas Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Overseas Shipholding's stakeholders.
Overseas Shipholding Quarterly Net Debt |
|
For most companies, including Overseas Shipholding, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Overseas Shipholding Group 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 1.1964 | Book Value 4.99 | Operating Margin 0.2346 | Profit Margin 0.1382 | Return On Assets 0.0554 |
Given that Overseas Shipholding'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 Overseas Shipholding 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 Overseas Shipholding to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Overseas Shipholding is said to be less leveraged. If creditors hold a majority of Overseas Shipholding's assets, the Company is said to be highly leveraged.
Overseas |
Overseas Shipholding Financial Leverage Rating
Overseas Shipholding Group bond ratings play a critical role in determining how much Overseas Shipholding 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 Overseas Shipholding's borrowing costs.Overseas Shipholding Debt to Cash Allocation
As Overseas Shipholding Group follows its natural business cycle, the capital allocation decisions will not magically go away. Overseas Shipholding'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 573.89 M in debt with debt to equity (D/E) ratio of 1.71, which is OK given its current industry classification. Overseas Shipholding has a current ratio of 0.74, suggesting that it has not enough short term capital to pay financial commitments when the payables are due. Debt can assist Overseas Shipholding until it has trouble settling it off, either with new capital or with free cash flow. So, Overseas Shipholding'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 Overseas Shipholding sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Overseas to invest in growth at high rates of return. When we think about Overseas Shipholding's use of debt, we should always consider it together with cash and equity.Overseas Shipholding Assets Financed by 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 Overseas Shipholding's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Overseas Shipholding, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an Overseas Shipholding debt ratio should be compared their industry average or other competing firms.Understaning Overseas Shipholding Use of Financial Leverage
Overseas Shipholding financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Overseas Shipholding'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 Overseas Shipholding assets, the company is considered highly leveraged. Understanding the composition and structure of overall Overseas Shipholding 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. Financial leverage can amplify the potential profits to Overseas Shipholding's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Overseas Shipholding's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Overseas Shipholding Group, Inc., together with its subsidiaries, owns and operates a fleet of oceangoing vessels. The company was founded in 1948 and is headquartered in Tampa, Florida. Overseas Shipholding operates under Oil Gas Midstream classification in the United States and is traded on New York Stock Exchange. It employs 953 people. Please read more on our technical analysis page.
Building efficient market-beating portfolios requires time, education, and a lot of computing power!
The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.
Try AI Portfolio ArchitectCheck out the analysis of Overseas Shipholding Fundamentals Over Time. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Complementary Tools for Overseas Stock analysis
When running Overseas Shipholding's price analysis, check to measure Overseas Shipholding'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 Overseas Shipholding is operating at the current time. Most of Overseas Shipholding's value examination focuses on studying past and present price action to predict the probability of Overseas Shipholding's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Overseas Shipholding's price. Additionally, you may evaluate how the addition of Overseas Shipholding to your portfolios can decrease your overall portfolio volatility.
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |
Is Overseas Shipholding'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 Overseas Shipholding. If investors know Overseas 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 Overseas Shipholding 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 1.247 | Dividend Share 0.06 | Earnings Share 0.77 | Revenue Per Share 5.757 | Quarterly Revenue Growth (0.05) |
The market value of Overseas Shipholding is measured differently than its book value, which is the value of Overseas that is recorded on the company's balance sheet. Investors also form their own opinion of Overseas Shipholding's value that differs from its market value or its book value, called intrinsic value, which is Overseas Shipholding'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 Overseas Shipholding's market value can be influenced by many factors that don't directly affect Overseas Shipholding'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 Overseas Shipholding's value and its price as these two are different measures arrived at by different means. Investors typically determine if Overseas Shipholding is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Overseas Shipholding'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.