Is Badger Meter (USA Stocks:BMI) low volatility a good sign for stockholders?

BMI Stock  USD 118.73  0.65  0.55%   
Badger Meter is generating 0.0851% of daily returns assuming volatility of 1.9397% on return distribution over 90 days investment horizon. As many adventurous traders are excited about electronic equipment, instruments & components space, it is only fair to concentrate on the risk of shorting Badger Meter based on its current volatility spike. We will go over a few points Badger Meter stockholders should remember regarding its volatility.
Published over two months ago
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Reviewed by Rifka Kats

The current Debt to Equity Ratio is estimated to increase to 0.016, while Long Term Debt to Equity is projected to decrease to 0.0411. The company has a current ratio of 3.14, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Debt can assist Badger Meter until it has trouble settling it off, either with new capital or with free cash flow. So, Badger Meter's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Badger Meter sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Badger to invest in growth at high rates of return. When we think about Badger Meter's use of debt, we should always consider it together with cash and equity.
Volatility is a rate at which the price of Badger Meter or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Badger Meter may increase or decrease. In other words, similar to Badger's beta indicator, it measures the risk of Badger Meter and helps estimate the fluctuations that may happen in a short period of time. So if prices of Badger Meter fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Badger Meter's Liquidity

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

How does Badger utilize its cash?

To perform a cash flow analysis of Badger Meter, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Badger Meter is receiving and how much cash it distributes out in a given period. The Badger Meter cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Badger Meter Net Cash Flow from Operations is increasing as compared to previous years. The last year's value of Net Cash Flow from Operations was reported at 82.45 Million

Badger Meter Volatility Drivers

Badger Meter unsystematic risk is unique to Badger Meter and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Badger Meter you can also buy Cognex. You can also mitigate this risk by investing in the information technology sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Badger Meter important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Badger Meter income statement and balance sheet. Here are more details about Badger volatility.
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