Asset Breakdown
Assets Non Current
314.2 M
Current Assets
| Total Assets | 364.21 Million | |
| Current Assets | 314.24 Million | |
| Assets Non Current | 49.96 Million | |
| Goodwill | 2.54 Million | |
| Tax Assets | 573,158 |
Thinking to drop Four (USA Stocks:FEDU) based on its current debt commitments?
 | By Nico Santiago | Macroaxis Story |
Every cloud has a silver lining, and in the case of Four Seasons Education (USA Stocks:FEDU), a diversified consumer services company in the education and training services industry, this adage might just hold true. Despite the company's significant loss of $33.5M and total liabilities amounting to $89.2M, it's important to note that Four Seasons Education has a robust net working capital of $423.8M and cash and short-term investments totaling a whopping $491.9M. This financial cushion could potentially offset its current debt obligations, making the idea of liquidating the company's stock a decision that requires careful consideration. Four Seasons Education is set to announce its earnings today. Currently, the company's Sales per Share remains relatively stable compared to the previous year. It is projected that the Total Debt will likely increase to approximately $3.8 million in 2023, while the Enterprise Value is expected to decrease to $23.9 million in the same year. Given the growing interest of investors in the diversified consumer services sector, it is worthwhile to consider Four Seasons Education as a potential investment. We will further analyze why investors might still want to acquire a stake in this business.
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Reviewed by Raphi Shpitalnik
Four Seasons Education currently has 3.73 million in liabilities, with a Debt to Equity (D/E) ratio of 0.02. This may suggest that Four Seasons is not leveraging borrowing to its full advantage. The company has a Beta (market volatility) of 0.5451, indicating potential diversification benefits within a portfolio. As market returns increase, Four Seasons' returns are expected to increase less than the market. However, during a bear market, the loss on holding Four Seasons is expected to be smaller.
While it's crucial to consider Four Seasons Education's historical returns, caution is advised when using current equity trending patterns. Our approach to predicting a stock's future performance involves examining both its past performance charts and the overall business, including all available technical indicators.
Four Seasons Education reveals fifteen different technical indicators that can assist in evaluating its performance. The company has an expected return of -0.25%. It's important to confirm Four Seasons Education's risk-adjusted performance and variance, as well as the relationship between the variance and potential upside, to determine if Four Seasons Education's past performance will be replicated in the near future.
Main Ideas
Four Seasons Education (FEDU) has been grappling with significant financial challenges, as evidenced by its net income loss of $33.5M and EBIT loss of $34.3M. The company's debt obligations are further underscored by its negative cash flows from financing activities, which stand at a staggering $96.7M. This financial instability is a red flag for investors, as it indicates that the company is struggling to generate enough cash to cover its debt obligations. Moreover, the company's total risk alpha of 0.4607 suggests that it carries a higher risk compared to other stocks in the Education & Training Services industry. This is further confirmed by its negative Treynor Ratio of -0.46 and Market Risk Adjusted Performance of -0.45, both of which indicate poor risk-adjusted returns. Given these factors, investors may want to consider liquidating their holdings in Four Seasons Education. Four Seasons financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Four Seasons, including all of Four Seasons'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 Four Seasons assets, the company is considered highly leveraged. Understanding the composition and structure of overall Four Seasons 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 Four Total Liabilities
Four Seasons Education liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Four Seasons Education 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 Four Seasons balance sheet include debt obligations and money owed to different Four Seasons vendors, workers, and loan providers. Below is the chart of Four short long-term liabilities accounts currently reported on its balance sheet. You can use Four Seasons Education financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Four Seasons's Liquidity
Four Seasons financial leverage refers to using borrowed capital as a funding source to finance Four Seasons Education ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Four Seasons 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 Four Seasons' 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 Four Seasons' 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 Four Seasons's total debt and its cash.
Is Four Seasons valued wisely by the market?
The newest Four Seasons Education price drop could raise concerns from private investors as the firm is trading at a share price of 8.25 on very low momentum in volume. The company directors and management were unable to exploit market volatilities in September. However, diversifying your overall positions with Four Seasons Education can protect your principal portfolio during market swings. The stock standard deviation of daily returns for 90 days investing horizon is currently 3.15. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Four Seasons partners.
As the old adage goes, "high risk, high reward," but the current financial status of Four Seasons Education (USA Stocks:FEDU) may not necessarily align with this philosophy. With a significant net loss of 33.5M and a negative operating income of 34.3M, the company's financial health appears to be in a precarious state. Despite a high current ratio of 5.62X, indicating a substantial amount of current assets relative to its current liabilities, the company's negative change in working capital of -6M and a substantial decrease in cash of -95.6M raise concerns about its liquidity and ability to meet short-term obligations. The company's debt to equity ratio of 0.019% is relatively low, which is a positive sign, but the probability of bankruptcy stands at a concerning 32.21%. Therefore, from an investment perspective, it may be prudent to consider liquidating Four Seasons Education stocks amidst its current debt obligations and financial instability. .
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