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Is Big Lots (NYSE:BIG) stock way too aggressive for baby boomers?
 | By Ellen Johnson | Macroaxis Story |
It looks as if Big Lots may not recover as fast as we have hopped for as its price went down 0.02% today. The company's current daily volatility is 4.55 percent, with a beta of 0.17 and an alpha of 0.73 over DOW. As many millenniums are excited about the latest volatility, it is fair to digest Big Lots based on its historical price patterns. I will address the reasons why this entity does not get much respect from shareholders under the current market uncertainty.
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Reviewed by Rifka Kats
Big Lots has roughly 311.87 M in cash with 427.66 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 7.95. Our advice module provides unbiased investment recommendation that can be used to complement current average analyst sentiment on Big Lots. Our advice engine provides an advice for the firm potential to grow from the perspective of an investor's risk tolerance and investing horizon.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Big Lots. Your research has to be compared to or analyzed against Big Lots' peers to derive any actionable benefits. When done correctly, Big Lots' competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Big Lots.
Investing in Big Lots, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Big Lots along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Big Lots' 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.
How important is Big Lots's Liquidity
Big Lots financial leverage refers to using borrowed capital as a funding source to finance Big Lots ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Big Lots 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 Big Lots' 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 Big Lots' 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 Big Lots's total debt and its cash.
Big Lots Gross Profit
Big Lots Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Big Lots 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 Big Lots Gross Profit growth over the last 10 years. Please check Big Lots' gross profit and other fundamental indicators for more details.
Big Lots Correlation with Peers
Investors in Big can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Big Lots. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Big Lots and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Big is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Big for more details
Breaking down the case for Big Lots
Big Lots appears to be very steady, given 1 month investment horizon. Big Lots secures Sharpe Ratio (or Efficiency) of 0.16, which signifies that the company had 0.16% of return per unit of standard deviation over the last month. Our philosophy in foreseeing the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. By analyzing Big Lots technical indicators you can presently evaluate if the expected return of 0.72% is justified by implied risk. Please makes use of Big Lots risk adjusted performance of 0.2391, and Mean Deviation of 3.15 to double-check if our risk estimates are consistent with your expectations.
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