Balchem Story

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22% of stocks are less volatile than Balchem, and 96% of all traded equity instruments are projected to make higher returns than the company over the 60 days investment horizon. While some risk-seeking investors are getting worried about basic materials space, it is reasonable to go over Balchem as a possible investment alternative. We will evaluate if the latest Balchem price volatility suggests a bounce in August.
Published over a month ago
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Is Balchem (NASDAQ:BCPC) a good hedge for your existing portfolios?
Balchem currently holds roughly 73.96 M in cash with 124.54 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 2.29.

How important is Balchem's Liquidity

Balchem financial leverage refers to using borrowed capital as a funding source to finance Balchem ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Balchem 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. Please check the breakdown between Balchem's total debt and its cash.

How Balchem utilizes its cash?

To perform a cash flow analysis of Balchem, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Balchem is receiving and how much cash it distributes out in a given period. The Balchem cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Balchem 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 124.46 Million

Sale by Dino Rossi of 200 shares of Balchem

Legal trades by Balchem insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Balchem insider trading alert for sale of common stock by Dino Rossi, President and CEO, on 21st of June 2020. This event was filed by Balchem Corp with SEC on 2006-11-06. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

What is the case for Balchem Investors

The company reported the previous year's revenue of 661.11 M. Net Income was 80.66 M with profit before overhead, payroll, taxes, and interest of 211.37 M.

Balchem showing appearance of lower volatility

The downside variance is down to 6.67 as of today. Balchem currently demonstrates below-verage downside deviation. It has Information Ratio of -0.02 and Jensen Alpha of -0.05. However, we do advice investors to further question Balchem expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Conclusion on Balchem

Whereas some other entities under the specialty chemicals industry are still a bit expensive, Balchem may offer a potential longer-term growth to investors. In closing, as of the 31st of July 2020, our analysis shows that Balchem almost mirrors the market. The company is fairly valued and projects very low odds of financial turmoil for the next 2 years. Our primary 30 days buy-or-sell advice on the company is 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 Raphi Shpitalnik do not own shares of Balchem. Please refer to our Terms of Use for any information regarding our disclosure principles.

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