Israel Stock Story

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USD 10.06  0.07  0.69%   

Israel Chemicals is scheduled to announce its earnings today. Israel Chemicals Dividends per Basic Common Share is relatively stable at the moment as compared to the past year. The company's current value of Dividends per Basic Common Share is estimated at 0.22. Enterprise Value over EBIT is expected to hike to 16.58 this year, although the value of Earnings before Tax will most likely fall to nearly 904 M. While many traders are getting carried away by overanalyzing basic materials space, it is reasonable to summarize Israel Chemicals as an investment alternative. We will summarize if it could be a much better year for Israel Chemicals shareholders.
Published over three months ago
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How much will Israel Chemicals owe in June?

This firm has 3.02 B in debt with debt to equity (D/E) ratio of 0.67, which is OK given its current industry classification. The company has a current ratio of 1.49, which is typical for the industry and considered as normal. Debt can assist Israel Chemicals until it has trouble settling it off, either with new capital or with free cash flow. So, Israel Chemicals' 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 Israel Chemicals sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Israel to invest in growth at high rates of return. When we think about Israel Chemicals' use of debt, we should always consider it together with cash and equity.
Israel Chemicals financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Israel Chemicals, including all of Israel Chemicals's 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 Israel Chemicals assets, the company is considered highly leveraged. Understanding the composition and structure of overall Israel Chemicals debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.
Please read more on our technical analysis page.

Understanding Israel Total Liabilities

Israel Chemicals liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Israel Chemicals has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Israel Chemicals balance sheet include debt obligations and money owed to different Israel Chemicals vendors, workers, and loan providers. Below is the chart of Israel short long-term liabilities accounts currently reported on its balance sheet.
You can use Israel Chemicals financial leverage analysis tool to get a better grip on understanding its financial position

How important is Israel Chemicals's Liquidity

Israel Chemicals financial leverage refers to using borrowed capital as a funding source to finance Israel Chemicals ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Israel Chemicals financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Israel Chemicals's total debt and its cash.

Is Israel Chemicals valued accurately by the market?

Israel Chemicals reported the last year's revenue of 6.23 B. Total Income to common stockholders was 565 M with profit before taxes, overhead, and interest of 1.49 B.

Asset Breakdown

7.2 B
Assets Non Current
Goodwill
3.8 B
Current Assets
Total Assets10.97 Billion
Current Assets3.78 Billion
Assets Non Current7.19 Billion
Goodwill789.79 Million
Tax Assets147.6 Million

Our perspective of the new Israel Chemicals hike

New Information Ratio is up to 0.1. Price may pull down again. Israel Chemicals shows above-average downside volatility for the selected time horizon. We advise investors to inspect Israel Chemicals further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Israel Chemicals future alpha. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Israel Chemicals' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Israel Chemicals' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Israel Chemicals Implied Volatility

Israel Chemicals' implied volatility exposes the market's sentiment of Israel Chemicals stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Israel Chemicals' 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 Israel Chemicals stock will not fluctuate a lot when Israel Chemicals' options are near their expiration.

The Bottom Line

While many other companies within the agricultural inputs industry are still a little expensive, even after the recent corrections, Israel Chemicals may offer a potential longer-term growth to stakeholders. While some stakeholders may not share our view we believe it may be a good time to trade Israel as the risk-reward trade off is not appealing enough to hold a position. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Israel Chemicals.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Israel Chemicals. Please refer to our Terms of Use for any information regarding our disclosure principles.

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