Big Lots has roughly 547.83
M in cash with 525.83
M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 14.76. The entity has 1.89
B in debt with debt to equity (D/E) ratio of 1.51, which is OK given its current industry classification. The firm has a current ratio of 1.46, which is typical for the industry and considered as normal.
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.
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.
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 0.14, which signifies that the company had 0.14% 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 0.57% is justified by implied risk. Please makes use of Big Lots
risk adjusted performance of 0.0645, and Mean Deviation of 3.0 to double-check if our risk estimates are consistent with your expectations.
Is Big Lots growth viable after the dip?
Mean deviation is down to 3.0. It may indicate a possible volatility dip. Big Lots shows above-average downside volatility for the selected time horizon. We advise investors to inspect Big Lots further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Big Lots future alpha. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Big Lots' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Big Lots' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
Our Final Perspective on Big Lots
Although other entities under the discount stores industry are still a bit expensive, Big Lots may offer a potential longer-term growth to shareholders. With a less-than optimistic outlook for your 30 days horizon, it may be a good time to short some or all of your Big Lots holdings as it seems the potential growth was already fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Big Lots.
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Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management.
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 Vlad Skutelnik do not own shares of Big Lots. Please refer to our
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