Zacks.com Highlights: Werner Enterprises, Amedysis, Haverty Furniture, Energen And MGIC Investment
Zacks Investment Research | Nov 01, 2018 07:52AM ET
For Immediate Release
Chicago, IL – November 1, 2018 - Stocks in this week’s article include: Werner Enterprises (NASDAQ:WERN) , Amedysis, Inc. (NASDAQ:AMED) , Haverty Furniture Companies (NYSE:HVT) , Energen Corp. (NYSE:EGN) and MGIC Investment Corp. (NYSE:MTG) .
Screen of the Week of Zacks Investment Research:
5 Low Leverage Stocks to Secure Your Portfolio Amid Volatility
Investors should know that uncertainty can hit the global equity market anytime and therefore it is better to take measures beforehand than repent later. This is why investors need to be acquainted with leverage.
Notably, leverage, otherwise termed as debt financing, is the use of exogenous funds by corporations to run their operations smoothly and expand the same. Although there is option for equity financing, historically, debt financing has been preferred over equity because of its easy and cheap availability.
However, one should keep in mind that debt financing remains a feasible option as long as the companies succeed in generating a higher rate of return compared to the interest rate. Exorbitant debt financing might even lead to a corporation’s bankruptcy in a worst case scenario.
Therefore, one can safely invest in a stock as long as it bears a low level of debt.
And here comes the importance of leverage ratios, which have been constructed to safeguard investors from becoming victims of debt trap. Debt-to-equity ratio is one such measure, perhaps the most popular one, to evaluate a company’s creditworthiness for potential equity investments.
Analyzing Debt/Equity
Debt-to-Equity Ratio = Total Liabilities/Shareholders’ Equity
This metric is a liquidity ratio that indicates the amount of financial risk a company bears. A company with a lower debt-to-equity ratio indicates improved solvency for a company.
As the third-quarter reporting season is in full swing, investors must be eyeing stocks that exhibited solid earnings growth in the prior quarters. But if a stock bears a high debt-to-equity ratio, in times of economic downturns, its so-called booming earnings picture might turn into a nightmare.
Thus, it will be wise for investors to select companies with low leverage. These are financially more secure and immune to financial bankruptcy.
And that's what we're screening for today…
For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research
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