| 2020 | 2021 | 2022 | 2023 (projected) | Revenues USD | 134.42 M | 183.9 M | 198.66 M | 168.12 M | Revenues | 134.42 M | 183.9 M | 198.66 M | 168.12 M |
Should I hold on to my Equity (USA Stocks:EQBK) position?
 | By Gabriel Shpitalnik | Macroaxis Story |
Equity Bancshares currently holds $235.26 million in liabilities, with a Debt to Equity (D/E) ratio of 8.48. This suggests that Equity Bancshares might face challenges in generating sufficient cash to meet its financial obligations. While debt can be beneficial for Equity Bancshares until it struggles to pay it off, either with new capital or free cash flow, there are risks involved. If the company fails to meet its legal obligations to repay debt, Equity Bancshares' shareholders could potentially lose their entire investment. A more common scenario, however, is when companies like Equity Bancshares issue additional shares at discounted prices, thereby diluting the value of existing shares. In such cases, debt can be a superior tool for Equity Bancshares to invest in growth at high rates of return. When considering Equity Bancshares' use of debt, it's crucial to also take into account its cash and equity positions.
Deep-dive analysis
Equity Bancshares, with its significant long-term investments worth 1.2B, presents an intriguing opportunity for investors looking for a leverage play. Despite carrying a long-term debt of 235.3M, the company has managed to maintain a healthy free cash flow of 70.6M, which indicates a robust financial health and ability to service its debt obligations. Furthermore, the bank has reported a net borrowing reduction, which is essentially a profit of 8.5M, underlining its successful debt management strategy. The company's coefficient of variation at 5.9K suggests a relatively stable performance, further reinforcing its investment appeal. Given these factors, Equity Bancshares appears to be a potentially rewarding investment for the month of August.Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.
Reviewed by Raphi Shpitalnik
Equity Bancshares, a notable player in the Banks-Regional industry, presents an intriguing investment potential as we move into August. With an end period cash flow of 104.4M, total revenue of 194.9M, and net invested capital of 645.3M, the company has demonstrated a robust financial standing. The bank's net interest income stands at 162.8M, underscoring its profitability in the core banking operations. However, investors should note the change in cash, which is a loss of 155.5M, indicating significant cash and cash equivalents changes. The company's total operating expenses are quite low at 5M, which, coupled with a total current liabilities of 32.8M, paints a picture of prudent financial management. The bank's short term investments are noteworthy, standing at a staggering 1.2B. The bank's retained earnings total equity is 140.1M, further strengthening its balance sheet. The analyst number of strong buys stands at 2, with a naive expected forecast value of 26.02 and a possible upside price of 28.45, suggesting promising returns for investors. As of the latest update on 2023-07-16, Equity Bancshares continues to be a compelling investment option in the domestic banking sector. Equity Bancshares is set to announce its earnings today, with the subsequent financial report anticipated on October 17, 2023. The stock continues to engage in regular trading activities. Currently, Equity Bancshares' Calculated Tax Rate is relatively stable compared to the previous year, with an estimated value of 24.77. The Cash and Equivalents Turnover is projected to increase to 1.52 this year, while the value of Free Cash Flow is likely to decrease to approximately $57 million. Given the widespread interest in the banking sector, it's reasonable to consider Equity Bancshares as a unique alternative. We will further examine whether this could be a more profitable year for Equity Bancshares' shareholders.Equity Bancshares financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Equity Bancshares, including all of Equity Bancshares'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 Equity Bancshares assets, the company is considered highly leveraged. Understanding the composition and structure of overall Equity Bancshares 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 Equity Total Liabilities
Equity Bancshares liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Equity Bancshares 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 Equity Bancshares balance sheet include debt obligations and money owed to different Equity Bancshares vendors, workers, and loan providers. Below is the chart of Equity short long-term liabilities accounts currently reported on its balance sheet. You can use Equity Bancshares financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Equity Bancshares's Liquidity
Equity Bancshares financial leverage refers to using borrowed capital as a funding source to finance Equity Bancshares ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Equity Bancshares 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 Equity Bancshares' 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 Equity Bancshares' 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 Equity Bancshares's total debt and its cash.
Breaking down Equity Bancshares Further
The company reported the previous year's revenue of 194.89 M. Net Income was 57.69 M with profit before overhead, payroll, taxes, and interest of 197.74 M.
Equity Bancshares, a prominent player in the Banks-Regional industry, has been demonstrating a promising financial performance. With a net income from continuing operations of $57.7M and a profit margin of 0.28%, the company's financial health is robust. The company's total operating expenses are well-managed at $5M, contributing to an EBIT of $101M. This is further supported by a strong balance sheet, with net tangible assets amounting to $346.4M and total current assets of $1.3B. The company's stock investment potential is further highlighted by its Price to Book ratio of 1.35X and Price to Sales ratio of 2.68X.The risk-adjusted performance stands at 0.0189, indicating a relatively low risk for investors. The company's shares are also largely held by institutions, with 67.42% of shares owned by them, suggesting strong market confidence. However, investors should also consider the company's total debt of $235.26M and short term debt of $138.9M. The company also reported a change in working capital of $1.9M and a negative cash and cash equivalents change of $155.5M. Despite these challenges, Equity Bancshares has managed to maintain a positive free cash flow of $70.6M. In conclusion, Equity Bancshares presents a compelling investment opportunity in August, backed by strong financial performance and market confidence. However, investors should also consider the company's debt levels and cash flow changes. .
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