Prosperity Bancshares PRXNA Bond

PB Stock  USD 73.25  0.85  1.15%   
Prosperity Bancshares holds a debt-to-equity ratio of 0.14. At present, Prosperity Bancshares' Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Net Debt is expected to grow to about 3.8 B, whereas Cash Flow To Debt Ratio is forecasted to decline to 0.08. With a high degree of financial leverage come high-interest payments, which usually reduce Prosperity Bancshares' Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Prosperity Bancshares' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Prosperity Bancshares' 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 Prosperity Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Prosperity Bancshares' stakeholders.
For most companies, including Prosperity Bancshares, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Prosperity Bancshares, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Prosperity Bancshares' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
0.9589
Book Value
77.275
Operating Margin
0.5691
Profit Margin
0.3871
Return On Assets
0.0112
At present, Prosperity Bancshares' Total Current Liabilities is projected to increase significantly based on the last few years of reporting. The current year's Liabilities And Stockholders Equity is expected to grow to about 40.5 B, whereas Non Current Liabilities Other is forecasted to decline to about 432.2 M.
  
Check out the analysis of Prosperity Bancshares Fundamentals Over Time.
For information on how to trade Prosperity Stock refer to our How to Trade Prosperity Stock guide.
View Bond Profile
Given the importance of Prosperity Bancshares' capital structure, the first step in the capital decision process is for the management of Prosperity Bancshares 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 Prosperity Bancshares to issue bonds at a reasonable cost.
Popular NameProsperity Bancshares PRXNA 4027 03 AUG 50
SpecializationBanks - Regional
Equity ISIN CodeUS7436061052
Bond Issue ISIN CodeUS74365PAD06
View All Prosperity Bancshares Outstanding Bonds

Prosperity Bancshares Outstanding Bond Obligations

Understaning Prosperity Bancshares Use of Financial Leverage

Prosperity Bancshares' financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Prosperity Bancshares' total debt position, including all outstanding debt obligations, and compares it with Prosperity Bancshares' equity. Financial leverage can amplify the potential profits to Prosperity Bancshares' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Prosperity Bancshares is unable to cover its debt costs.
Last ReportedProjected for Next Year
Short and Long Term Debt Total4.1 B4.3 B
Net Debt3.6 B3.8 B
Short Term DebtB4.2 B
Long Term Debt3.7 B3.9 B
Short and Long Term Debt2.1 B2.2 B
Net Debt To EBITDA 116.70  122.54 
Debt To Equity 1.10  1.15 
Interest Debt Per Share 85.85  90.15 
Debt To Assets 0.20  0.21 
Long Term Debt To Capitalization 0.34  0.36 
Total Debt To Capitalization 0.52  0.55 
Debt Equity Ratio 1.10  1.15 
Debt Ratio 0.20  0.21 
Cash Flow To Debt Ratio 0.08  0.08 
Please read more on our technical analysis page.

Also Currently Popular

Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.
Check out the analysis of Prosperity Bancshares Fundamentals Over Time.
For information on how to trade Prosperity Stock refer to our How to Trade Prosperity Stock guide.
You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Is Regional Banks space 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 Prosperity Bancshares. If investors know Prosperity 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 Prosperity Bancshares 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
0.116
Dividend Share
2.24
Earnings Share
4.64
Revenue Per Share
12.146
Quarterly Revenue Growth
0.088
The market value of Prosperity Bancshares is measured differently than its book value, which is the value of Prosperity that is recorded on the company's balance sheet. Investors also form their own opinion of Prosperity Bancshares' value that differs from its market value or its book value, called intrinsic value, which is Prosperity Bancshares' 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 Prosperity Bancshares' market value can be influenced by many factors that don't directly affect Prosperity Bancshares' 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 Prosperity Bancshares' value and its price as these two are different measures arrived at by different means. Investors typically determine if Prosperity Bancshares is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Prosperity Bancshares' 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.
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.