Will G III (NASDAQ:GIII) current volatility spike continue?
 | By Ellen Johnson | Macroaxis Story |
Given the investment horizon of 60 days G III is expected to generate 4.21 times more return on investment than the market. However, the company is 4.21 times more volatile than its market benchmark. It trades about 0.22 of its potential returns per unit of risk. The DOW is currently generating roughly 0.11 per unit of risk. While many risk-averse stockholders are getting carried away by overanalyzing consumer cyclical space, it is reasonable to concentrate on G III Apparel. We will examine why it could be a different year for G III shareholders.
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Reviewed by Michael Smolkin
G III Apparel currently holds roughly 252.8 M in cash with 401.73 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 5.23. Volatility is a rate at which the price of G III 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 G III may increase or decrease. In other words, similar to GIII's beta indicator, it measures the risk of G III and helps estimate the fluctuations that may happen in a short period of time. So if prices of G III 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 G III's Liquidity
G III financial leverage refers to using borrowed capital as a funding source to finance G III Apparel Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. G III 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 G III'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 G III'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 G III's total debt and its cash.
G III Gross Profit
G III Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing G III 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 G III Gross Profit growth over the last 10 years. Please check G III's gross profit and other fundamental indicators for more details.
G III Volatility Drivers
G III unsystematic risk is unique to G III Apparel 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 G III you can also buy Signet Jewelers. You can also mitigate this risk by investing in the consumer discretionary 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 G III 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 G III income statement and balance sheet. Here are more details about GIII volatility.Click cells to compare fundamentals
Breaking down the case for G III
The current price rise of G III may raise some interest from stockholders. The stock closed today at a share price of 23.98 on 1,368,000 in trading volume. The company management teams may have good odds in positioning the entity resources to exploit market volatility in January. The stock standard deviation of daily returns for 30 days investing horizon is currently 4.91. This high volatility is attributed to the latest market swings and not so good earnings reports for some of the G III Apparel partners.
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