Debt is cheaper than equity. Point.
Especially when it comes to interest rates...
Especially when it comes to interest rates...
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@GeldGenie Well, since mid 2022 all the new issued debt has an effective coupon rate at 4-5%..
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•@gwf_07 doesn‘t change, that equity is more expensive than debt ^^
I‘d suggest to read un WACC (Weighted Average Cost of Capital) and what it consists of. Should clear some things up 😊
Edit: NESNs Equity ratio is at like 0.4. 0.3-0.7 are the sweet spots, depending on the industry. NESN peers sit at .4-.5 as well. So not worrying at all. I‘d rather see them
have more debt and buy up some more smaller players….
I‘d suggest to read un WACC (Weighted Average Cost of Capital) and what it consists of. Should clear some things up 😊
Edit: NESNs Equity ratio is at like 0.4. 0.3-0.7 are the sweet spots, depending on the industry. NESN peers sit at .4-.5 as well. So not worrying at all. I‘d rather see them
have more debt and buy up some more smaller players….
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•@GeldGenie Thank you, after a little research and reading, I understood perfectly what they are doing. Anyway, as I don't agree on such practice, I will skip this company from my list of possible investments.
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@gwf_07 Sure, up to you. :-D But keep in mind that them leveraging their capital potantially strenghtens their financial perspective. As long as the leverage is below .5 I wouldn't be worried at all.
BUT NESN has a hard path ahead of them and long breath is needed until they are overly profitable. For me NESN is not a growth driver, but rather a stabalizing investment in my portfolio. The dividends are yum & can't deny there is some emotional attachment to a swiss economic juwel. :-D
BUT NESN has a hard path ahead of them and long breath is needed until they are overly profitable. For me NESN is not a growth driver, but rather a stabalizing investment in my portfolio. The dividends are yum & can't deny there is some emotional attachment to a swiss economic juwel. :-D
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@GeldGenie It is important to assess that Nestle is not ''simply'' a food company, but much more an investment company that is predominantly represented in the food sector. Nestle is underestimated in that regard and their liquidity allows for a nimble navigating the market's currents. Many people are not aware that they own a gigantic portfolio of minority shares in non-food defensives, like 20% of $OR . This is not insignificant, as it means they do not only rely on the food sector (although their strongest business, traditionally) but see and grasp potential where it occurs, all the while benefitting from both growth and defensive brands. This is something that is rather unusual for the segment, and Nestle has been acing it for at least half a century now.
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•@DynasticGrind What else do they have other than $OR ?
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