Arco Platform Story

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ARCE -- USA Stock  

USD 37.74  0.33  0.88%

While some of us are excited about consumer defensive space, it makes sense to digest Arco Platform Limited in greater detail to make a better perception of its potential. As we have suggested previously, Arco Platform is beginning its dip as shareholders shift to be more bearish due to the increased sector volatility. Arco Platform Limited slowly supersedes the market. The returns on the market and returns on Arco Platform appear slightly-related for the last few months. Sound basic indicators of the firm may indicate signs of shorter-term price drift for shareholders. Arco Platform Limited is scheduled to announce its earnings tomorrow.
Published over a month ago
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Is Arco Platform (NASDAQ:ARCE) moving to revert?
This firm's average rating is Buy from 2 analysts. Do analysts base this consensus on technical analyses? We know that typical technical analysis utilizes price momentum, patterns, and trends looking at historical prices. It aims to identify signals based on Arco Platform market sentiment investors' perception of the future value of Arco Platform. Let us look at a few aspects of Arco Platform technical analysis. The company has Profit Margin (PM) of (5.64) %, which may suggest that it does not properly executes on its current pricing strategies or is unable to control all of the operational costs. This is way below average.
Using predictive technical analysis, we will analyze different prices and returns patterns and diagnose historical swings to determine the real value of Arco Platform Limited. In general, we focus on analyzing Arco Platform stock price patterns and their correlations with different microeconomic environment and drivers. We also apply predictive analytics to build Arco Platform's daily price indicators and compare them against related drivers such as momentum indicators and various other types of predictive indicators. Using this methodology combined with a more conventional technical analysis and fundamental analysis, we attempt to find the most accurate representation of Arco Platform's intrinsic value. In addition to deriving basic predictive indicators for Arco Platform, we also check how macroeconomic factors affect Arco Platform price patterns. Please read more on our technical analysis page or use our predictive modules below to complement your research.
Sophisticated investors, who have witnessed many market ups and downs, frequently view the market will even out over time. This tendency of Arco Platform's stock price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy. Please use the tools below to analyze the current value of Arco Platform in the context of predictive analytics.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Arco Platform. Your research has to be compared to or analyzed against Arco Platform's peers to derive any actionable benefits. When done correctly, Arco Platform's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy towards taking a position in Arco Platform Limited.

How does Arco Platform Stands against Peers?

Analyzing Arco Platform competition or peers my help you to expand the diversification possibilities of your existing portfolios and to get a better perspective on locking in new positions. Try to analyze the advantages of investing in traded instruments related to Arco Platform across multiple sectors and thematic ideas. A good competitive analysis can cover a lot of different areas. But what areas to choose depends on who you are. The more exhaustive you are in your analysis, the more effective your competitive analysis will be.
Check out Arco Platform Competition Details

How Arco Platform utilizes its cash?

To perform a cash flow analysis of Arco Platform, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Arco Platform is receiving and how much cash it distributes out in a given period. The Arco Platform cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Arco Platform Net Cash Flow from Operations is projected to increase significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at 32.18 Million

Closer look at Arco Platform Downside Variance

Arco Platform Limited has current Downside Variance of 5.9. Downside Variance (or DV) is measured by target semi-variance and is termed downside volatility. It is expressed in percentages and therefore allows for rankings in the same way as variance. One way to view downside volatility is the annualized variance of returns below the target.

Downside Variance is the probability-weighted squared below-target returns. The squaring of the below-target returns has the effect of penalizing failures at an exponential rate. This is consistent with observations made on the behavior of individual decision-making under.

Downside Variance 
 = 
SUM(RET DEV)2 
N(ER) 
 = 
5.9
SUM = Summation notation
RET DEV = Actual returns deviation over selected period
N(ER) = Number of points with returns less than expected return for the period
Let's now compare Arco Platform Downside Variance to its closest peers:
ARCE
FEDU
COE
EDU
GHC
ARCE5.897269851231611
FEDU21.47
COE7.9
EDU2.88
GHC2.85

Arco Platform has 67 percent chance to dip under $42 in the coming weeks

Latest Jensen Alpha is up to 0.06. Price may dip again. Arco Platform Limited currently demonstrates below-verage downside deviation. It has Information Ratio of 0.0 and Jensen Alpha of 0.06. However, we do advice investors to further question Arco Platform Limited expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Conclusion on Arco Platform

Although many other companies in the education & training services industry are either recovering or due for a correction, Arco Platform may not be performing as strong as the other in terms of long-term growth potentials. To conclude, as of the 29th of November 2020, our analysis shows that Arco Platform slowly supersedes the market. The firm is fairly valued and projects very small chance of bankruptcy for the next 2 years. Our primary 30 days 'Buy-Sell' recommendation on the firm is Cautious Hold.

About Contributor

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 Achuva Shats do not own shares of Arco Platform Limited. Please refer to our Terms of Use for any information regarding our disclosure principles.

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