Will Aerogrow International continue to go insane?
 | By Ellen Johnson | Macroaxis Story |
This thesis is geared towards all Aerogrow International partners and investors who considers an exit from the corporation. I will inspect the possibilities of making Aerogrow International into a steady grower in April inspite the current mess. The company current chance of distress is over 89.0 percent. What is Aerogrow International Target Price Odds to finish over Current Price? Proceeding from normal probability distribution, the odds of Aerogrow International to move above current price in 30 days from now is about 91.83%. The Aerogrow International probability density function shows the probability of Aerogrow International Stock to fall within a particular range of prices over 30 days . Given the investment horizon of 30 days, Aerogrow International has beta of 0.4618 . This suggests as returns on market go up, Aerogrow International average returns are expected to increase less than the benchmark. However during bear market, the loss on holding Aerogrow International will be expected to be much smaller as well. Additionally, the company has a negative alpha implying that the risk taken by holding this equity is not justified. Aerogrow International is significantly underperforming S&P 500.
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Reviewed by Michael Smolkin
The entity has beta of 1.73. As market goes up, the company is expected to significantly outperform it. However, if the market returns are negative, Aerogrow International will likely underperform. This firm dividends can provide a clue to current valuation of the stock. Aerogrow International is not expected to issue dividends this year as it trying to preserve or re-invest any of the funds available for distribution to stakeholders. Lets now check Aerogrow International Operating Margin. Based on recorded statements Aerogrow International has Operating Margin of -1.6%. This is much lower than that of the Consumer Cyclical sector, and significantly lower than that of Home Improvement Stores industry, The Operating Margin for all stocks is notably higher than Aerogrow International.
How important is Aerogrow International's Liquidity
Aerogrow International financial leverage refers to using borrowed capital as a funding source to finance Aerogrow International ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Aerogrow International 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 Aerogrow International's 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 Aerogrow International's 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 Aerogrow International's total debt and its cash.
A Deeper Perspective
Aerogrow International reported previous year revenue of 32.01M. Net Loss for the year was (717K) with profit before overhead, payroll, taxes, and interest of 10.7M. The big decline in price over the last few months for Aerogrow International could raise concerns from investors as the firm closed today at a share price of 1.68 on 9200.000 in volume. The company executives failed to add value to investors and positioning the firm components to exploit market volatility in February. However, diversifying your holdings with Aerogrow International or any similar stocks can still protect your portfolios during high-volatility market scenarios. The stock standard deviation of daily returns for 30 days (very short) investing horizon is currently 4.2323. This high volatility is attributed to the latest market swings and not so good earning reports for some of the Aerogrow International partners. Aerogrow International is selling for under 1.68. That is 5.08 percent down. Day high is 1.73. Taking everything into account, we belive that Aerogrow International is currently undervalued with very high probability of distress in the next two years. Our ongoing 'Buy/Hold/Sell' recommendation on the corporation is Cautious Hold.
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