Americas Stock Story

CRMT
 Stock
  

USD 109.03  4.73  4.54%   

25% of stocks are less volatile than Americas, and 99% of all traded equity instruments are projected to make higher returns than the company over the 60 days investment horizon. As many old-fashioned traders are trying to avoid consumer cyclical space, it makes sense to review Americas Car-Mart a little further and try to understand its current volatility patterns. We will break down how risky is to take a position in Americas Car-Mart at this time. Americas Car-Mart's low volatility may still impact the value of the stock as we estimate it as currently undervalued. The real value, based on our analysis, is getting close to 95.37 per share.
Published over two months ago
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Is Americas Car Mart (NASDAQ:CRMT) a good hedge for your existing portfolios?

The entity currently holds 433.3 M in liabilities with Debt to Equity (D/E) ratio of 0.96, which is about average as compared to similar companies. The firm has a current ratio of 17.13, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Americas Car-Mart until it has trouble settling it off, either with new capital or with free cash flow. So, Americas Car-Mart'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 Americas Car-Mart sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Americas to invest in growth at high rates of return. When we think about Americas Car-Mart's use of debt, we should always consider it together with cash and equity.
Volatility is a rate at which the price of Americas Car-Mart 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 Americas Car-Mart may increase or decrease. In other words, similar to Americas's beta indicator, it measures the risk of Americas Car-Mart and helps estimate the fluctuations that may happen in a short period of time. So if prices of Americas Car-Mart 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 Americas Car-Mart's Liquidity

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

How does Americas utilize its cash?

To perform a cash flow analysis of Americas Car-Mart, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Americas Car-Mart is receiving and how much cash it distributes out in a given period. The Americas Car-Mart cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Americas Car-Mart Net Cash Flow from Operations is comparatively stable at the moment as compared to the past year. Americas Car-Mart reported Net Cash Flow from Operations of (114.28 Million) in 2021

Americas Car-Mart Volatility Drivers

Americas Car-Mart unsystematic risk is unique to Americas Car-Mart 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 Americas Car-Mart you can also buy La-Z-Boy. You can also mitigate this risk by investing in the auto & truck dealerships 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 Americas Car-Mart 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 Americas Car-Mart income statement and balance sheet. Here are more details about Americas volatility.
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