They say that in the world of metals and mining, it's all about digging deep and striking gold. In the case of Standard Lithium (SLI), a player in the diversified metals and mining industry, the recent rally in its stock price has many investors wondering if this is a vein worth mining. With a current valuation of $263.16 million and a healthy net working capital of $48.8 million, the company appears to be on solid financial ground. However, a closer look at key performance indicators, such as a return on asset of -0.21 and a total cash loss from operating activities of $24.7 million, suggests that the company's growth trajectory may not be as straightforward as it seems. Currently, Standard Lithium's Stock-Based Compensation to Revenue ratio is on an upward trend compared to previous years. The company's Capex to Depreciation ratio is projected to rise to 73.30, while its Market Cap is expected to dip below $101.9 million. It's crucial for investors to understand an asset's future growth potential before purchasing its shares. This article will delve into Standard Lithium's prospects. We'll explore why investors might still consider investing in the company. Presently, Standard Lithium's probability of distress is less than 39 percent. The question remains: will traders maintain their optimism, or should a sell-off be anticipated?
Typically, a company's
financial statements are the reports that show the
financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Standard Lithium income statement, its balance sheet, and the statement of cash flows. Potential Standard Lithium investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Standard Lithium investors may use each financial statement separately, they are all related. The changes in Standard Lithium's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Standard Lithium's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our
technical analysis and
fundamental analysis pages.
The goal of Standard Lithium
fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Standard Lithium performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Standard Lithium shares is the value that is considered the true value of the share. If
the intrinsic value of Standard is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Standard Lithium. Please read more on our
fundamental analysis page.
How effective is Standard Lithium in utilizing its assets?
Standard Lithium reports assets on its Balance Sheet. It represents the amount of Standard resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Standard Lithium aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Diversified Metals & Mining space. To get a better handle on how balance sheet or income statements item affect Standard volatility, please check the breakdown of all its
fundamentals.
Standard Lithium Gross Profit
Standard Lithium Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Standard Lithium previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Standard Lithium Gross Profit growth over the last 10 years. Please check Standard Lithium's
gross profit and other
fundamental indicators for more details.
An Additional Perspective On Standard Lithium
The recent surge in Standard Lithium short term price appreciation created some momentum for traders as it was traded today as low as
1.68 and as high as
1.95 per share. The company executives have successfully maneuvered the company at convenient times to take advantage of all market conditions in
April. The stock standard deviation of daily returns for 90 days investing horizon is currently 4.99. This high volatility is attributed to the latest market swings and not-so-good earnings reports for some of the Standard Lithium partners.
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence Standard Lithium's decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over Standard Lithium's decisions due to their larger holdings.
Asset Utilization
One of the ways to look at asset utilization of Standard is to check how much profit was generated for every dollar of assets it reports. Standard Lithium has a negative utilization of assets of -0.21 %, losing $0.002066 for each dollar of assets held by the company. Inadequate asset utilization indicates the company is being less effective with each dollar of assets it has. In other words, asset utilization of Standard Lithium shows how discouraging it operates for each dollar spent on its assets.
| | Non Current Assets Total134.6 M | | | Net Tangible Assets190.7 M | |
| Other Current Assets | 2.38 Million | 0.58 |
| Total Current Assets | 74.92 Million | 18.4 |
| Non Current Assets Total | 134.57 Million | 33.05 |
| Non Currrent Assets Other | 70,965 | 0.0174 |
| Intangible Assets | 1.22 Million | 0.3 |
| Net Tangible Assets | 190.72 Million | 46.84 |
| Other Assets | 3.32 Million | 0.82 |
"Never put all your eggs in one basket," is a common saying in finance, and it's particularly relevant when considering the potential of Standard Lithium (SLI). Despite a recent rally, the company's fundamentals reveal a mixed bag. On the positive side, SLI has a healthy net asset value of $173.5M and a significant amount of property, plant, and equipment valued at $104M. However, the company is operating at a loss, with an operating income of -$51.6M and a net income indicating a loss of $50.2M. Furthermore, the company's probability of bankruptcy stands at a concerning 49.15%. While the company's market capitalization of $287.95M suggests some investor confidence, the negative income figures and high bankruptcy risk indicate that caution is warranted.
Are Standard Lithium technical ratios showing a bounce back?
Despite the recent uptick in Standard Lithium's Information Ratio to 0.02, indicating a minor improvement in risk-adjusted performance, investors should proceed with caution. The potential for a price drop persists, suggesting the current situation may not be a definitive recovery. The market's volatility, combined with the inherent risks of lithium mining companies, calls for a careful evaluation of the stock's technical indicators. While the improved Information Ratio may seem positive, the looming risk of a price drop should not be overlooked. Standard Lithium exhibits above-average downside volatility for the selected time frame. Understanding market volatility trends can help investors time the market.
Proper use of volatility indicators can measure Standard Lithium's stock risk against market volatility during both bullish and bearish trends. The increased volatility of bear markets can directly affect Standard Lithium's stock price, causing investor stress as share values drop, often prompting portfolio rebalancing.In conclusion, the future of Standard Lithium (USA Stocks: SLI) appears promising, given the rising demand for lithium in the energy sector. Although the company's valuation market value stands at
1.78, its real value is estimated to be
1.35, indicating a potential overvaluation. This discrepancy might lead to a correction in the near term. However, considering the broader market trends and the company's strategic positioning, it is plausible that the stock may recuperate in June. Investors are advised to keep a close eye on the stock and make informed decisions based on comprehensive market analysis..
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Aina Ster is a Member of Macroaxis Editorial Board. Aina delivers weekly perspective on ongoing market and economic trends, analysis and tips from predictive analysis to forecasting across various financial instruments.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Aina Ster do not own shares of Standard Lithium. Please refer to our
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