Is Capitol Fed (NASDAQ:CFFN) low volatility a good sign for institutional investors?

Macroaxis Story

Capitol Fed is currently does not generate positive expected returns and assumes 1.3662% risk (volatility on return distribution) over the 90 days horizon. As many investors are getting excited about financial services space, it is fair to outline Capitol Fed Finl. We will cover the possibilities of Capitol Fed's current volatility to continue through February.

Published over a year ago

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Reviewed by Rifka Kats

The company currently holds 1.62 B in liabilities with Debt to Equity (D/E) ratio of 0.2, which may suggest Capitol Fed is not taking enough advantage from borrowing.

Is Capitol Fed (NASDAQ:CFFN) low volatility a good sign for institutional investors?

Volatility is a rate at which the price of Capitol Federal 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 Capitol Federal may increase or decrease. In other words, similar to Capitol's beta indicator, it measures the risk of Capitol Federal and helps estimate the fluctuations that may happen in a short period of time. So if prices of Capitol Federal 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 Capitol Federal's Liquidity

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

Capitol Federal Gross Profit

Capitol Federal Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Capitol Federal 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 Capitol Federal Gross Profit growth over the last 10 years. Please check Capitol Federal's gross profit and other fundamental indicators for more details.

Capitol Federal Volatility Drivers

Capitol Federal unsystematic risk is unique to Capitol Federal Financial 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 Capitol Federal you can also buy Community West Bancshares. You can also mitigate this risk by investing in the financials 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 Capitol Federal 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 Capitol Federal income statement and balance sheet. Here are more details about Capitol volatility.

	Total Assets	Net Debt	Total Liab	Common Stock	Good Will	Capital Stock	Total Revenue	Gross Profit	Net Income	Tax Provision	Ptb Ratio	Pb Ratio	Ev To Sales	Payout Ratio	Pfcf Ratio	Pe Ratio	Current Ratio	Graham Number	Ebt Per Ebit	Quick Ratio	Cash Ratio	Debt Ratio	Market Cap
Total Assets		0.76	-0.81	0.43	0.73	-0.36	0.01	0.01	0.55	-0.48	-0.2	-0.2	-0.65	-0.17	-0.11	-0.36	-0.87	0.56	0.86	-0.86	-0.87	0.45	-0.03
Net Debt	0.76		-0.38	0.42	0.68	-0.03	0.15	0.15	0.29	-0.17	0.16	0.16	-0.39	-0.12	0.0	-0.09	-0.76	0.43	0.72	-0.79	-0.75	0.69	0.19
Total Liab	-0.81	-0.38		-0.55	-0.47	0.45	0.01	0.0	-0.55	0.56	0.35	0.35	0.62	0.09	0.15	0.42	0.8	-0.48	-0.84	0.75	0.8	-0.21	0.16
Common Stock	0.43	0.42	-0.55		0.34	-0.53	0.02	0.02	0.44	-0.29	0.03	0.03	-0.43	-0.1	-0.03	-0.2	-0.63	0.03	0.64	-0.63	-0.62	0.53	0.04
Good Will	0.73	0.68	-0.47	0.34		-0.16	0.02	0.01	0.4	-0.3	-0.05	-0.05	-0.48	-0.04	0.16	-0.16	-0.69	0.51	0.68	-0.72	-0.66	0.6	0.18
Capital Stock	-0.36	-0.03	0.45	-0.53	-0.16		0.73	0.73	-0.87	0.81	0.4	0.4	0.83	0.66	0.47	0.82	0.12	0.3	-0.14	0.1	0.11	-0.15	0.68
Total Revenue	0.01	0.15	0.01	0.02	0.02	0.73		1.0	-0.74	0.82	0.41	0.41	0.72	0.82	0.56	0.88	-0.37	0.47	0.31	-0.38	-0.38	0.1	0.9
Gross Profit	0.01	0.15	0.0	0.02	0.01	0.73	1.0		-0.73	0.81	0.42	0.42	0.72	0.82	0.54	0.88	-0.37	0.46	0.31	-0.38	-0.38	0.1	0.89
Net Income	0.55	0.29	-0.55	0.44	0.4	-0.87	-0.74	-0.73		-0.92	-0.44	-0.44	-0.97	-0.83	-0.43	-0.92	-0.28	0.01	0.33	-0.27	-0.26	0.22	-0.64
Tax Provision	-0.48	-0.17	0.56	-0.29	-0.3	0.81	0.82	0.81	-0.92		0.51	0.51	0.95	0.74	0.57	0.96	0.18	0.08	-0.25	0.14	0.16	-0.09	0.82
Ptb Ratio	-0.2	0.16	0.35	0.03	-0.05	0.4	0.41	0.42	-0.44	0.51		1.0	0.45	0.35	0.32	0.55	0.03	-0.37	-0.08	0.0	0.03	0.62	0.51
Pb Ratio	-0.2	0.16	0.35	0.03	-0.05	0.4	0.41	0.42	-0.44	0.51	1.0		0.45	0.35	0.32	0.55	0.03	-0.37	-0.08	0.0	0.03	0.62	0.51
Ev To Sales	-0.65	-0.39	0.62	-0.43	-0.48	0.83	0.72	0.72	-0.97	0.95	0.45	0.45		0.75	0.43	0.91	0.37	-0.04	-0.42	0.36	0.36	-0.26	0.66
Payout Ratio	-0.17	-0.12	0.09	-0.1	-0.04	0.66	0.82	0.82	-0.83	0.74	0.35	0.35	0.75		0.36	0.84	-0.14	0.18	0.1	-0.14	-0.15	0.0	0.66
Pfcf Ratio	-0.11	0.0	0.15	-0.03	0.16	0.47	0.56	0.54	-0.43	0.57	0.32	0.32	0.43	0.36		0.63	-0.15	0.32	0.11	-0.17	-0.15	0.11	0.78
Pe Ratio	-0.36	-0.09	0.42	-0.2	-0.16	0.82	0.88	0.88	-0.92	0.96	0.55	0.55	0.91	0.84	0.63		0.02	0.15	-0.09	0.0	0.01	0.02	0.88
Current Ratio	-0.87	-0.76	0.8	-0.63	-0.69	0.12	-0.37	-0.37	-0.28	0.18	0.03	0.03	0.37	-0.14	-0.15	0.02		-0.65	-0.99	1.0	1.0	-0.51	-0.31
Graham Number	0.56	0.43	-0.48	0.03	0.51	0.3	0.47	0.46	0.01	0.08	-0.37	-0.37	-0.04	0.18	0.32	0.15	-0.65		0.65	-0.67	-0.66	-0.11	0.43
Ebt Per Ebit	0.86	0.72	-0.84	0.64	0.68	-0.14	0.31	0.31	0.33	-0.25	-0.08	-0.08	-0.42	0.1	0.11	-0.09	-0.99	0.65		-0.98	-0.99	0.48	0.24
Quick Ratio	-0.86	-0.79	0.75	-0.63	-0.72	0.1	-0.38	-0.38	-0.27	0.14	0.0	0.0	0.36	-0.14	-0.17	0.0	1.0	-0.67	-0.98		0.99	-0.54	-0.35
Cash Ratio	-0.87	-0.75	0.8	-0.62	-0.66	0.11	-0.38	-0.38	-0.26	0.16	0.03	0.03	0.36	-0.15	-0.15	0.01	1.0	-0.66	-0.99	0.99		-0.5	-0.32
Debt Ratio	0.45	0.69	-0.21	0.53	0.6	-0.15	0.1	0.1	0.22	-0.09	0.62	0.62	-0.26	0.0	0.11	0.02	-0.51	-0.11	0.48	-0.54	-0.5		0.23
Market Cap	-0.03	0.19	0.16	0.04	0.18	0.68	0.9	0.89	-0.64	0.82	0.51	0.51	0.66	0.66	0.78	0.88	-0.31	0.43	0.24	-0.35	-0.32	0.23

Click cells to compare fundamentals

What is driving Capitol Federal Investor Appetite?

Capitol Fed Finl reported the previous year's revenue of 210.66 M. Net Income was 76.03 M with profit before overhead, payroll, taxes, and interest of 210.66 M.

	2019	2020	2021	2022 (projected)
Share Based Compensation	2.56 M	2.53 M	2.28 M	3.04 M
Net Cash Flow from Operations	92.93 M	74.47 M	67.02 M	73.36 M

Share Based Compensation Net Cash Flow from Operations

Capitol is expecting lower volatility in February

The potential upside is down to 2.03 as of today. Capitol Fed Finl exhibits very low volatility with skewness of -0.12 and kurtosis of 0.59. However, we advise investors to further study Capitol Fed Finl 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 Capitol Fed'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 Capitol Fed'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.

Capitol Fed Implied Volatility

Capitol Fed's implied volatility exposes the market's sentiment of Capitol Fed Finl stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Capitol Fed'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 Capitol Fed stock will not fluctuate a lot when Capitol Fed's options are near their expiration.

Our Final Take On Capitol Fed

Whereas some firms in the banks—regional industry are either recovering or due for a correction, Capitol may not be as strong as the others in terms of longer-term growth potentials. On the whole, as of the 28th of January 2022, our up-to-date 90 days buy-or-sell advice on the company is Strong Hold. We believe Capitol Fed is undervalued with close to average probability of distress for the next two years.

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Editorial Staff

Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies. 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 Gabriel Shpitalnik do not own shares of Capitol Federal Financial. Please refer to our Terms of Use for any information regarding our disclosure principles.

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