Thinking to drop White (NYSE:WTM) based on its current debt commitments?
 | By Raphi Shpitalnik | Macroaxis Story |
White Mountains Insu is scheduled to announce its earnings today. As many passive investors are finally getting excited about financial services space, White Mountains Insurance could be a good starting point. We will check if the company can maintain a respectable level of debt while minimizing operating losses.
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Reviewed by Michael Smolkin
White Mountains Insu has 393.4 M in debt with debt to equity (D/E) ratio of 0.13, which may show that White Mountains is not taking advantage of profits from borrowing. The firm maintains a market beta of 0.1295, which attests to not very significant fluctuations relative to the market. Let's try to break down what White's beta means in this case. As returns on the market increase, White Mountains returns are expected to increase less than the market. However, during the bear market, the loss on holding White Mountains will be expected to be smaller as well. Even though it is essential to pay attention to White Mountains Insu historical price patterns, it is always good to be careful when utilizing equity current price history. Our philosophy towards determining any stock's future performance is to check both, its past performance charts as well as the business as a whole, including all available technical indicators. White Mountains Insu exposes twenty-eight different technical indicators, which can help you to evaluate its performance. White Mountains Insu has an expected return of -0.0119%. Please be advised to check out White Mountains Insu maximum drawdown, as well as the relationship between the skewness and day typical price to decide if White Mountains Insu stock performance from the past will be repeated at some point in the near future. White Mountains financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of White Mountains, including all of White Mountains'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 White Mountains assets, the company is considered highly leveraged. Understanding the composition and structure of overall White Mountains 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 White Total Liabilities
White Mountains Insurance liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. White Mountains Insurance 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 White Mountains balance sheet include debt obligations and money owed to different White Mountains vendors, workers, and loan providers. Below is the chart of White short long-term liabilities accounts currently reported on its balance sheet. You can use White Mountains Insurance financial leverage analysis tool to get a better grip on understanding its financial positionHow important is White Mountains's Liquidity
White Mountains financial leverage refers to using borrowed capital as a funding source to finance White Mountains Insurance ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. White Mountains 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. Financial leverage can amplify the potential profits to White Mountains' 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 White Mountains' 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). Please check the breakdown between White Mountains's total debt and its cash.
Detailed Perspective On White Mountains
The small pull down in market price for the last few months may raise some interest from stakeholders as it is trading at a share price of 903.85 on slow start in trading volume. The company executives did not add much value to White Mountains Insurance investors in October. However, diversifying your holdings with White Mountains Insu or similar stocks can still protect your portfolio during high-volatility market scenarios. The stock standard deviation of daily returns for 30 days investing horizon is currently 1.93. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.
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