How risky is to double down on Huntsman in March?
 | By Ellen Johnson | Macroaxis Story |
Considering the 90-day investment horizon Huntsman is expected to generate 2.8 times more return on investment than the market. However, the company is 2.8 times more volatile than its market benchmark. It trades about 0.11 of its potential returns per unit of risk. The DOW is currently generating roughly 0.11 per unit of risk. Although many risk-takers are getting more into basic materials space, some of us are not very happy with Huntsman's current volatility. We will cover the possibilities of Huntsman's current volatility to continue through March. Huntsman's low volatility may still impact the value of the stock as we estimate it as currently fairly valued. The real value, based on our analysis, is getting close to 28.55 per share.
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Reviewed by Gabriel Shpitalnik
Huntsman has roughly 1.17 B in cash with 329 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 5.29. Volatility is a rate at which the price of Huntsman 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 Huntsman may increase or decrease. In other words, similar to Huntsman's beta indicator, it measures the risk of Huntsman and helps estimate the fluctuations that may happen in a short period of time. So if prices of Huntsman 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 Huntsman's Liquidity
Huntsman financial leverage refers to using borrowed capital as a funding source to finance Huntsman ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Huntsman 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 Huntsman'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 Huntsman'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 Huntsman's total debt and its cash.
Huntsman Gross Profit
Huntsman Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Huntsman 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 Huntsman Gross Profit growth over the last 10 years. Please check Huntsman's gross profit and other fundamental indicators for more details.
Huntsman Volatility Drivers
Huntsman unsystematic risk is unique to Huntsman 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 Huntsman you can also buy Green Plains Renewable. You can also mitigate this risk by investing in the materials 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 Huntsman 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 Huntsman income statement and balance sheet. Here are more details about Huntsman volatility.Click cells to compare fundamentals
Detailed Outlook On Huntsman
Huntsman reported the last year's revenue of 6.01 B. Total Income to common stockholders was 169 M with profit before taxes, overhead, and interest of 1.38 B.
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