Eargo Story

<div class='circular--portrait' style='background:#754DEB;color: #F0FFF0;font-size:3em;'>EAR</div>
EAR -- USA Stock  

USD 56.67  0.87  1.56%

The stock is currently experiencing an active upward rally. Although many aggressive traders are getting into healthcare space, Eargo Inc may or may not be your first choice. We will check if the company can maintain a respectable level of debt while minimizing operating losses. Here we also measure the ability of Eargo to meet its long-term debt obligations, such as interest payments on debt, the final principal payment on the debt, and any other fixed obligations like lease payments.
Published over a month ago
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Should I hold on to my Eargo (NASDAQ:EAR) position?
This firm has 16.01 M in debt with debt to equity (D/E) ratio of 0.31, which is OK given its current industry classification. The company has a current ratio of 3.6, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due.
Eargo financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Eargo, including all of Eargo'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 Eargo assets, the company is considered highly leveraged. Understanding the composition and structure of overall Eargo 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 Eargo Total Liabilities

Eargo Inc liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Eargo Inc 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 Eargo balance sheet include debt obligations and money owed to different Eargo vendors, workers, and loan providers. Below is the chart of Eargo short long-term liabilities accounts currently reported on its balance sheet.
You can use Eargo Inc financial leverage analysis tool to get a better grip on understanding its financial position

How important is Eargo's Liquidity

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

A Deeper look at Eargo

The latest price spike of Eargo Inc could raise concerns from retail investors as the firm it trading at a share price of 47.99 on very low momentum in volume. The company executives may have good odds in positioning the firm resources to exploit market volatility in January. The stock standard deviation of daily returns for 30 days investing horizon is currently 4.35. This high volatility is attributed to the latest market swings and not so good earnings reports for some of the Eargo partners.

Liabilities Breakdown

21.8 M
Current Liabilities
8.9 M
Long-Term Liabilities
Total Liabilities30.7 Million
Current Liabilities21.85 Million
Long-Term Liabilities8.85 Million

Will Eargo latest spike continue?

Potential upside is down to 9.8. It may connote a possible volatility fall. Eargo Inc shows above-average downside volatility for the selected time horizon. We advise investors to inspect Eargo Inc further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Eargo future alpha.

Our Bottom Line On Eargo Inc

While many of the other players within the medical devices industry are still a little expensive, even after the recent corrections, Eargo may offer a potential longer-term growth to retail investors. On the whole, as of the 11th of December 2020, we believe that at this point, Eargo is overvalued with low chance of distress within the next 2 years. Our current Buy-Hold-Sell recommendation on the enterprise is Hold.

About Contributor

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 Achuva Shats do not own shares of Eargo Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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