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Is Energy Focus (NASDAQ:EFOI) a new disruptor?
 | By Gabriel Shpitalnik | Macroaxis Story |
It seems as Energy Focus will continue to recover much faster as its share price surged up 12.55% today. The company's current daily volatility is 51.65 percent, with a beta of 6.05 and an alpha of 6.44 over DOW. While some of us are getting more passionate about electrical equipment, it makes sense to concentrate on Energy Focus in greater detail to make a better estimate of its volatility. We will analyze why it could be a much better year for Energy Focus shareholders.
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Reviewed by Rifka Kats
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 6.0521, 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 8.37 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.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Energy Focu. Your research has to be compared to or analyzed against Energy Focu's peers to derive any actionable benefits. When done correctly, Energy Focu's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Energy Focu.
Investing in Energy Focu, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Energy Focu along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Energy Focu's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
How important is Energy Focu's Liquidity
Energy Focu financial leverage refers to using borrowed capital as a funding source to finance Energy Focu ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Energy Focu 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 Energy Focu'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 Energy Focu'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 Energy Focu's total debt and its cash.
Energy Focu Gross Profit
Energy Focu Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Energy Focu 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 Energy Focu Gross Profit growth over the last 10 years. Please check Energy Focu's gross profit and other fundamental indicators for more details.
Energy Focu Correlation with Peers
Investors in Energy can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Energy Focu. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Energy Focu and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Energy is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Energy for more details
A Deeper look at Energy
Energy Focus is out of control given 1 month investment horizon. Energy Focus secures Sharpe Ratio (or Efficiency) of 0.16, which denotes the company had 0.16% of return per unit of risk over the last month. Our standpoint towards predicting the volatility of a stock is to use Energy Focus market data together with company specific technical indicators. We were able to analyze and collect data for twenty-one different technical indicators, which can help you to evaluate if expected returns of 8.37% are justified by taking the suggested risk. Use Energy Focus Mean Deviation of 14.16, downside deviation of 5.22, and Coefficient Of Variation of 624.77 to evaluate company specific risk that cannot be diversified away.
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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 Energy Focu. Please refer to our Terms of Use for any information regarding our disclosure principles.