Barnes Stock Story


USD 2.61  0.09  3.33%   

Barnes Noble Education is scheduled to announce its earnings today. The current year Interest Coverage is expected to grow to 2.92. The current year Calculated Tax Rate is expected to grow to 94.14. While some of us are becoming more enthusiastic about consumer cyclical space, let's digest Barnes Noble Education in greater detail to make a better estimate of its debt utilization.
Published over a month ago
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What is July outlook for Barnes (NYSE:BNED)?

The company currently holds 470.1 M in liabilities with Debt to Equity (D/E) ratio of 1.92, which is about average as compared to similar companies. Barnes Noble Education has a current ratio of 1.23, suggesting that it is in a questionable position to pay out its financial obligations when due. Debt can assist Barnes Noble until it has trouble settling it off, either with new capital or with free cash flow. So, Barnes Noble'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 Barnes Noble Education sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Barnes to invest in growth at high rates of return. When we think about Barnes Noble's use of debt, we should always consider it together with cash and equity.
Barnes Noble financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Barnes Noble, including all of Barnes Noble's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Barnes Noble assets, the company is considered highly leveraged. Understanding the composition and structure of overall Barnes Noble debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.
Please read more on our technical analysis page.

Understanding Barnes Total Liabilities

Barnes Noble Education liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Barnes Noble Education has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Barnes Noble balance sheet include debt obligations and money owed to different Barnes Noble vendors, workers, and loan providers. Below is the chart of Barnes short long-term liabilities accounts currently reported on its balance sheet.
You can use Barnes Noble Education financial leverage analysis tool to get a better grip on understanding its financial position

How important is Barnes Noble's Liquidity

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

What is driving Barnes Noble Investor Appetite?

The latest Barnes Noble Education price dip could raise concerns from shareholders as the firm is trading at a share price of 2.94 on 1,281,169 in volume. The company executives were unable to exploit market volatilities in May. However, diversifying your overall positions with Barnes Noble Education can protect your principal portfolio during market swings. The stock standard deviation of daily returns for 90 days investing horizon is currently 4.84. This high volatility is attributed to the latest market swings and not-so-good earnings reports for some of the Barnes Noble partners.

Liabilities Breakdown

Tax Liabilities
337.3 M
Current Liabilities
108 M
Long-Term Liabilities
Total Liabilities522.33 Million
Current Liabilities337.28 Million
Long-Term Liabilities108.01 Million
Tax Liabilities28.07 Million

Our take on Barnes Noble small dip

Latest Risk Adjusted Performance is up to -0.09. Price may dip again. Barnes Noble Education exhibits very low volatility with skewness of 0.03 and kurtosis of -0.76. However, we advise investors to further study Barnes Noble Education technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Barnes Noble's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Barnes Noble's 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.

Barnes Noble Implied Volatility

Barnes Noble's implied volatility exposes the market's sentiment of Barnes Noble Education stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Barnes Noble's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Barnes Noble stock will not fluctuate a lot when Barnes Noble's options are near their expiration.

The Bottom Line

Although some other entities in the specialty retail industry are either recovering or due for a correction, Barnes may not be as strong as the others in terms of longer-term growth potentials. To conclude, as of the 29th of June 2022, our present 90 days buy-hold-sell recommendation on the firm is Hold. We believe Barnes Noble is currently undervalued with close to average probability of distress for the next two years.

Editorial Staff

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 Barnes Noble Education. Please refer to our Terms of Use for any information regarding our disclosure principles.

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