Energy Story

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EFOI -- USA Stock  

USD 6.91  0.23  3.22%

Given the investment horizon of 90 days, Energy Focus is expected to generate 34.6 times more return on investment than the market. However, the company is 34.6 times more volatile than its market benchmark. It trades about 0.16 of its potential returns per unit of risk. The DOW is currently generating roughly 0.14 per unit of risk. While some risk-loving traders are indifferent towards current market volatility, it is reasonable to concentrate on the risk of investing in Energy Focus. What exactly are Energy Focus shareholders getting in September? The current Energy risk factors may impact the value of the stock as we estimate Energy Focus as currently undervalued. The real value is approaching 8.73 per share.
Published over a month ago
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Energy Focus (NASDAQ:EFOI) high volatility trend continues
Energy Focus currently holds roughly 2.91 M in cash with (2.56 M) of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 0.92. Energy Focus holds a performance score of 11 on a scale of zero to a hundred. The firm shows a Beta (market volatility) of 5.9931, which means a somewhat significant risk relative to the market. Let's try to break down what Energy's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Energy Focus will likely underperform. Although it is essential to pay attention to Energy Focus historical returns, it is also good to be reasonable about what you can do with equity current trending patterns. Our philosophy towards predicting future potential of any stock is to look not only at its past charts but also at the business as a whole, including all available fundamental and technical indicators. To evaluate if Energy Focus expected return of 8.44 will be sustainable into the future, we have found twenty-one different technical indicators, which can help you to check if the expected returns are sustainable. Use Energy Focus treynor ratio, and the relationship between the standard deviation and downside variance to analyze future returns on Energy Focus.
Volatility is a rate at which the price of Energy Focus 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 Energy Focus may increase or decrease. In other words, similar to Energy's beta indicator, it measures the risk of Energy Focus and helps estimate the fluctuations that may happen in a short period of time. So if prices of Energy Focus 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 Energy Focus's Liquidity

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

How Energy utilizes its cash?

To perform a cash flow analysis of Energy Focus, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Energy Focus is receiving and how much cash it distributes out in a given period. The Energy Focus cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Energy Focus Net Cash Flow from Operations is most likely to decrease significantly in the upcoming years. The last year's value of Net Cash Flow from Operations was reported at (6.62 Million)

Energy Focus Volatility Drivers

Energy Focus unsystematic risk is unique to Energy Focus 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 Energy Focus you can also buy Fuling Global. You can also mitigate this risk by investing in the furnishings, fixtures & appliances 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 Energy Focus 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 Energy Focus income statement and balance sheet. Here are more details about Energy volatility.
Click cells to compare fundamentals   

Exercise or conversion by Geraldine McManus of 3000 shares of Energy Focus subject to Rule 16b-3

Legal trades by Energy Focus insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Energy insider trading alert for exercise of restricted stock units by Geraldine McManus, the corporate stakeholder, on 17th of September 2020. This event was filed by Energy Focus Inc with SEC on 2020-09-17. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

What is driving Energy Focus Investor Appetite?

The company reported the previous year's revenue of 13.31 M. Net Loss for the year was (5.05 M) with profit before overhead, payroll, taxes, and interest of 1.97 M.
 2018 2019 2020 (projected)
Interest Expense8 K317 K418.38 K
Gross Profit3.41 M1.97 M2.03 M

Our take on today Energy Focus drop

The treynor ratio is down to 1.42 as of today. Energy Focus is displaying above-average volatility over the selected time horizon. Investors should scrutinize Energy Focus independently to ensure intended market timing strategies are aligned with expectations about Energy Focus volatility.

The Bottom Line

While other companies within the home furnishings & fixtures industry are still a little expensive, even after the recent corrections, Energy Focus may offer a potential longer-term growth to stockholders. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor exit any shares of Energy Focus at this time. The Energy Focus risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Energy Focus.

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 Energy Focus. Please refer to our Terms of Use for any information regarding our disclosure principles.

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