Cato Story

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CATO -- USA Stock  

USD 8.75  0.01  0.11%

Given the investment horizon of 60 days, Cato is expected to generate 2.46 times more return on investment than the market. However, the company is 2.46 times more volatile than its market benchmark. It trades about 0.1 of its potential returns per unit of risk. The DOW is currently generating roughly 0.06 per unit of risk. As many old-fashioned traders are trying to avoid consumer cyclical space, it makes sense to outline Cato Corporation a little further and try to understand its current volatility patterns. We will inspect if the expected returns on Cato will justify its current volatility.
Published over two weeks ago
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Should you buy more of Cato (NYSE:CATO) based on latest volatility?
Cato Corporation currently holds roughly 136.96 M in cash with (40.01 M) of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 5.98.
Volatility is a rate at which the price of Cato 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 Cato may increase or decrease. In other words, similar to Cato's beta indicator, it measures the risk of Cato and helps estimate the fluctuations that may happen in a short period of time. So if prices of Cato 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 Cato's Liquidity

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

How Cato utilizes its cash?

To perform a cash flow analysis of Cato, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Cato is receiving and how much cash it distributes out in a given period. The Cato cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Cato Net Cash Flow from Operations is quite stable at the moment as compared to the past year. The company's current value of Net Cash Flow from Operations is estimated at 89.92 Million

Cato Volatility Drivers

Cato unsystematic risk is unique to Cato 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 Cato you can also buy Express. You can also mitigate this risk by investing in the apparel retail 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 Cato 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 Cato income statement and balance sheet. Here are more details about Cato volatility.
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