DTE shares are only compelling on a pullback that would move the dividend to 4.0% or higher. However, I do think this is a stable utility for long-term investors, but the right entry point is key, and that point is about 10% below today’s price. But for right now, the baby bonds are offering attractive yields over 5.6% and they are taxed the same way as money market income. Because debt is inherently risky, lenders and investors tend to favor businesses with lower D/E ratios.
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This allows the company to write off debts owed to lenders and is typically carried out in the event of a company’s imminent bankruptcy, or if it is unable to meet its debt repayments. For example, a company has USD2 million in assets and USD1 million in debt. To obtain the company’s equity figure, USD1 million is subtracted from the USD2 million in assets, as this figure includes assets funded by both debt and equity.
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Some business analysts and investors see more meaning in long-term debt-to-equity ratios because long-term debt establishes what a company’s capital structure looks like for the long term. While high levels of long-term company debt may cause investors discomfort, on the plus side, the obligations to settle (or refinance) these debts may be years down the road. To manually calculate DTI, divide your total monthly debt payments by your monthly income before taxes and deductions are taken out. Multiply that number by 100 to get your DTI expressed as a percentage. However, the D/E ratio may sometimes be applied to personal finance, where it is known as personal debt-to-equity ratio. The personal D/E ratio is calculated by dividing an individual’s total personal liabilities by his personal equity.
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In the past three months, shares of California Water have risen 11.5% compared with the industry’s 5.6% growth. You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security.
- D/E ratios should always be considered on a relative basis compared to industry peers or to the same company at different points in time.
- Typically, borrowers with low debt-to-income ratios are likely to manage their monthly debt payments effectively.
- In general, the State of Michigan’s population is growing slowly by about 0.5% per year and has increased from 9.87 million in 2010 to 10.04 million in 2023.
- While DTI ratios are widely used as technical tools by lenders, they can also be used to evaluate personal financial health.
- We take a closer look at DTE’s different ratios to gain a better understanding of the stock.
Generally, a personal loan can have higher allowable maximum DTI than a mortgage. Get a little extra cash back in your wallet by lowering your monthly payments and adequately managing your debts. Don’t include living expenses such as utility bills, food, and entertainment for more accurate results. Sometimes the debt-to-income ratio is lumped in together with the debt-to-limit ratio. The President & COO – DTE Gas now owns 26,118 shares after completing the transaction at $107.25 per share.
The pursuit of outperformance leads many investors to carefully choose individual stocks. Therefore, the debt-to-equity ratio of Apple Inc. stood at 2.41 as on September 29, 2018. Therefore, the debt-to-equity ratio of XYZ Ltd stood at 0.40 as on December 31, 2018. In the United States, normally, a DTI of 1/3 (33%) or less is considered to be manageable. A DTI of 1/2 (50%) or more is generally considered too high, as it means at least half of income is spent solely on debt. Upgrade to MarketBeat All Access to add more stocks to your watchlist.
As we have seen, warmer weather can impact DTE’s earnings, and the utility is in an area with relatively slow population growth. According to Morningstar, in the future, “the clean energy transition will be the cornerstone of DTE’s growth.” There is a lot of work to do to get to the net zero carbon target of the future. Today, there are two coal-fired plants from the 1970s and 1980s (Monroe and Belle River) and a well-known nuclear plant (Fermi) built in 1988.
While DTI ratios are widely used as technical tools by lenders, they can also be used to evaluate personal financial health. Gearing ratios focus more heavily on the concept of leverage than other ratios used in accounting or investment analysis. The underlying principle generally assumes that some leverage is good, but that too much places an organization at risk. California Water’s systematic investment plans in infrastructure will help it further provide customers with efficient water and wastewater services. In the first quarter of 2024, the company made capital investments of $109.8 million, up 34% year over year.
A number of other institutional investors and hedge funds also recently modified their holdings of the stock. MV Capital Management Inc. grew its holdings in DTE Energy by 104.4% during the fourth quarter. MV Capital Management Inc. now owns 280 shares of the utilities provider’s stock valued at $31,000 after purchasing an additional 143 shares during the period. Milestone Investment Advisors LLC bought a new stake in shares of DTE Energy in the 3rd quarter valued at $36,000. Authentikos Wealth Advisory LLC acquired a new stake in DTE Energy during the 3rd quarter worth $43,000.
While many of the best VA lenders insist upon a maximum 41% DTI, sufficient residual income may help you qualify with a higher DTI. Most mortgage lenders encourage a back-end ratio of 36% or less for a conventional mortgage, although it’s possible to qualify with a ratio as high as 43%. You don’t need to include non-loan expenses such as groceries, utilities, commuting costs and health insurance premiums.
Your debt-to-income (DTI) ratio and credit history are two important financial health factors lenders consider when determining if they will lend you money. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Investors and business stakeholders analyze a company’s debt-to-equity ratio to assess the amount of financial leverage a company is using. The company also recently declared a quarterly dividend, which will be paid on Monday, July 15th. Shareholders of record on Monday, June 17th will be given a dividend of $1.02 per share.
It is in a friendly regulatory environment, but with a slow growing population. Its earnings are impacted by global warming, but its gas operations are rate decoupled. In 2023 it was $17.4 billion or 38.9% of total assets, while in 2020 it was $19.0 billion or 41.7% total assets. Most of this debt is at rates ranging from 3.3% to 4.2% with maturities rolling through 2053.
Relative to your income before taxes, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your bills. https://www.bookkeeping-reviews.com/ Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
According to MarketBeat, the stock has a consensus rating of “Moderate Buy” and an average target price of $115.50. You may find personal loan companies willing to lend money to consumers with debt-to-income ratios of 50% or more, and some exclude mortgage debt from the DTI calculation. That’s because one of the most common uses of personal loans is to consolidate credit card debt, which can help you pay off debt faster and lower your DTI.
The earliest large amount to come due is $800 million in 2028, currently at a rate of 4.875%. Baby bonds are unsecured debt obligations, structured to trade like preferred shares of stock, and paying quarterly interest. The interest is taxable as income to the buyer, and deductible as an expense for the issuer. Depending on their tax rate, investors may find these instruments more attractive than the common share dividend.
Below is an outline of their guidelines of the debt-to-income ratios that they consider creditworthy or need improvement. The debt-to-equity ratio, or D/E ratio, represents a company’s financial leverage and measures how much a company is leveraged through debt, relative to its shareholders’ equity. The D/E ratio is a metric commonly used to measure the extent to which a company is leveraged through external versus internal financing. Michigan Public Service Commission («MPSC») regulates DTE Energy and is composed of three members, each appointed by the Governor to serve staggered six-year terms.
ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. Debt in itself isn’t bad, and companies who don’t make use of debt financing can potentially place their firm at a disadvantage. The company has $740.00 million in cash and $22.09 billion in debt, giving a net cash position of -$21.35 billion or -$103.19 per share. The beta is 0.64, so DTE’s price volatility has been lower than the market average. To calculate your estimated DTI ratio, simply enter your current income and payments. Although important, the DTI ratio is only one financial ratio or metric used in making a credit decision.
This region also includes the well to do communities of Bloomfield Hills, Farmington Hills and Ann Arbor. Gas operations are in parts of the state where the population is stable or increasing slightly. In general, the State of Michigan’s population is growing slowly by about 0.5% per year and has increased from 9.87 million in 2010 to 10.04 million in 2023. What operations management basics counts as a “good” debt-to-equity (D/E) ratio will depend on the nature of the business and its industry. Generally speaking, a D/E ratio below 1 would be seen as relatively safe, whereas values of 2 or higher might be considered risky. Companies in some industries, such as utilities, consumer staples, and banking, typically have relatively high D/E ratios.
Regardless, you should strive to reduce your DTI ratio to 43% or less. Some mortgage programs permit a maximum DTI of 50%, such as Federal Housing Administration (FHA) loans and Fannie Mae HomeReady loans. However, lenders may have different DTI maximums and stricter borrower requirements. For example, if your monthly debts equal $2,500 and you earn $6,000 in pre-tax income, you’d have a DTI of 42%. You’ll have an easier time qualifying for your desired rate and term with a lower DTI. For example, you may be able to qualify for a 30-year term with a DTI of 36% but not for a 15-year mortgage as the shorter term requires a higher monthly payment.
It has been increasing dividends every year since the initiation of its dividend payment. Currently, its quarterly dividend is 28 cents per share, resulting in an annualized dividend of $1.12 per share.This marks its 317th consecutive quarterly dividend. On a long-term basis, California Water aims to achieve a dividend payout ratio of 60%. Currently, its dividend yield is 2.12%, better than the Zacks S&P 500 composite’s yield of 1.3%.
Coal provides 34.3% of the company’s power generation today, while wind and solar provide about 14.0%. Today’s average P/E ratio for the utility sector is above the 16.4 median of the last two decades, and its future direction will depend on what the Fed does with rates. If a company has a D/E ratio of 5, but the industry average is 7, this may not be an indicator of poor corporate management or economic risk. There also are many other metrics used in corporate accounting and financial analysis used as indicators of financial health that should be studied alongside the D/E ratio. There is a separate ratio called the credit utilization ratio (sometimes called debt-to-credit ratio) that is often discussed along with DTI that works slightly differently. The debt-to-credit ratio is the percentage of how much a borrower owes compared to their credit limit and has an impact on their credit score; the higher the percentage, the lower the credit score.
Scotiabank lowered their price objective on shares of DTE Energy from $129.00 to $120.00 and set a “sector outperform” rating for the company in a research report on Monday, April 22nd. TheStreet upgraded shares of DTE Energy from a “c+” rating to a “b-” rating in a report on Friday, March 15th. Finally, Wolfe Research lowered shares of DTE Energy from an “outperform” rating to a “peer perform” rating in a research note on Tuesday, January 16th. One equities research analyst has rated the stock with a sell rating, four have issued a hold rating and seven have assigned a buy rating to the company.
The personal equity figure is obtained by subtracting liabilities from total personal assets. Similar to the D/E ratio for companies, the personal D/E ratio can also assess personal financial risk through existing leverage. DTE Energy currently has three series of junior subordinated debentures, or baby bonds.
In most cases, this would be considered a sign of high risk and an incentive to seek bankruptcy protection. If interest rates are higher when the long-term debt comes due and needs to be refinanced, then interest expense will rise. These balance sheet categories may include items that would not normally be considered debt or equity in the traditional sense of a loan or an asset. The utility company has been consistently paying dividends to its shareholders.
DTE Energy last posted its quarterly earnings data on April 25th, 2024. The utilities provider reported $1.67 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $1.71 by $0.04. The business had revenue of $3.24 billion for the quarter, compared to analysts’ expectations of $3.81 billion. DTE Energy has generated $6.11 earnings per share over the last year ($6.11 diluted earnings per share) and currently has a price-to-earnings ratio of 18.8. Earnings for DTE Energy are expected to grow by 7.03% in the coming year, from $6.69 to $7.16 per share.
For example, the banking industry typically tends to operate with a higher proportion of debt relative to equity. Therefore, a D/E ratio of more than 1.0 is common, indicating that the company’s total liabilities exceed its total shareholder equity. However, this may not necessarily mean that the company is struggling to meet its financial obligations. Debt-financed growth may serve to increase earnings, and if the incremental profit increase exceeds the related rise in debt service costs, then shareholders should expect to benefit. However, if the additional cost of debt financing outweighs the additional income that it generates, then the share price may drop. The cost of debt and a company’s ability to service it can vary with market conditions.
