Fifth Third Bonds

FITB -  USA Stock  

USD 45.47  1.15  2.47%

Fifth Third'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. Fifth Third's financial risk is the risk to Fifth Third 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).
Please check the analysis of Fifth Third Fundamentals Over Time.

Fifth Bonds 

 
Refresh
The current year Total Debt is expected to grow to about 19.2 B, whereas Long Term Debt is forecasted to decline to about 12.3 B.

Fifth Current Financial Burden

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

Asset vs Debt

Equity vs Debt

For most companies, including Fifth Third, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running Fifth Third Bancorp 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.
Given that Fifth Third'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 Fifth Third 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 Fifth Third to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Fifth Third is said to be less leveraged. If creditors hold a majority of Fifth Third's assets, the company is said to be highly leveraged.

Fifth Third Quarterly Debt to Equity Ratio

8.223Share
Given the importance of Fifth Third's capital structure, the first step in the capital decision process is for the management of Fifth Third 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 Fifth Third Bancorp to issue bonds at a reasonable cost.

Fifth Third Bond Ratings

Fifth Third Bancorp bond ratings play a critical role in determining how much Fifth Third 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 Fifth Third's borrowing costs.
Overall Bond Rating
Adequate
Average S&P Rating
BBB
Piotroski F Score
4  Poor
Beneish M Score

Fifth Third Bancorp Debt to Cash Allocation

As Fifth Third Bancorp follows its natural business cycle, the capital allocation decisions will not magically go away. Fifth Third'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 15.95 B in liabilities with Debt to Equity (D/E) ratio of 7.9, indicating the company may have difficulties to generate enough cash to satisfy its financial obligations.

Fifth Third Long Term Debt Over Time

Fifth Third Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Fifth Third 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.

Fifth Third Debt Ratio

    
  9.24   
It appears most of the Fifth Third'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 Fifth Third's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Fifth Third, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a Fifth Third debt ratio should be compared their industry average or other competing firms.
Share Download
Share Download

Fifth Third Corporate Bonds Issued

Fifth Third 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. Fifth Third 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. Most Fifth bonds can be classified according to their maturity, which is the date when Fifth Third Bancorp 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.
Issue DateMaturityCouponRef Coupon  Rating
FIFTH THIRD BANCORP03/04/200803/01/20388.255.375
BBB
FIFTH THIRD BANCORP03/07/201203/15/20223.52.0
BBB+
FIFTH THIRD BANCORP11/20/201301/16/20244.32.25
BBB

Fifth Third Bancorp Historical Liabilities

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

Fifth Third financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Fifth Third'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 Fifth Third assets, the company is considered highly leveraged. Understanding the composition and structure of overall Fifth Third 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
Long Term Debt13.4 B12.3 B
Total Debt18.9 B19.2 B
Issuance Repayment of Debt Securities-54 M-55.4 M
Debt to Equity Ratio 7.07  6.99 
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution. Fifth Thirds common stock is traded on the NASDAQ Global Select Market under the symbol FITB. Fifth Third operates under BanksRegional classification in the United States and is traded on NASDAQ Exchange. It employs 19171 people.
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 Fifth Third without increasing your portfolio risk or giving up 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 Portfolio Manager Now

   

Portfolio Manager

State of the art Portfolio Manager to monitor and improve performance of your invested capital
All  Next Launch Module

Becoming a Better Investor with Macroaxis

Macroaxis puts the power of mathematics on your side. We analyze your portfolios and positions such as Fifth Third Bancorp using complex mathematical models and algorithms, but make them easy to understand. There is no real person involved in your portfolio analysis. We perform a number of calculations to compute absolute and relative portfolio volatility, correlation between your assets, value at risk, expected return as well as over 100 different fundamental and technical indicators.

Build Optimal Portfolios

Align your risk with return expectations

Fix your portfolio
By capturing your risk tolerance and investment horizon Macroaxis technology of instant portfolio optimization will compute exactly how much risk is acceptable for your desired return expectations
Please check the analysis of Fifth Third Fundamentals Over Time. Note that the Fifth Third Bancorp information on this page should be used as a complementary analysis to other Fifth Third'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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

Complementary Tools for Fifth Stock analysis

When running Fifth Third Bancorp price analysis, check to measure Fifth Third'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 Fifth Third is operating at the current time. Most of Fifth Third's value examination focuses on studying past and present price action to predict the probability of Fifth Third's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Fifth Third's price. Additionally, you may evaluate how the addition of Fifth Third to your portfolios can decrease your overall portfolio volatility.
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Is Fifth Third'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 Fifth Third. If investors know Fifth 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 Fifth Third listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Fifth Third Bancorp is measured differently than its book value, which is the value of Fifth that is recorded on the company's balance sheet. Investors also form their own opinion of Fifth Third's value that differs from its market value or its book value, called intrinsic value, which is Fifth Third'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 Fifth Third's market value can be influenced by many factors that don't directly affect Fifth Third'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 Fifth Third's value and its price as these two are different measures arrived at by different means. Investors typically determine Fifth Third value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Fifth Third'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.
  • 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.