LendingClub Story

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LC -- USA Stock  

USD 11.56  0.50  4.15%

The upcoming quarterly report is expected on the 16th of February 2021. The stock is undergoing an active upward rally. LendingClub Average Assets are projected to increase significantly based on the last few years of reporting. The past year's Average Assets were at 3.6 Billion. The current year Earnings Before Interest Taxes and Depreciation Amortization EBITDA is expected to grow to about 27.4 M, whereas Net Income Per Employee is forecasted to decline to (24.8 K). While some of us are becoming more enthusiastic about financial services space, let's go over LendingClub in greater detail to make a better estimate of its debt utilization. Let's try to analyze if LendingClub shares are reasonably priced going into February.
Published over two weeks ago
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Will LendingClub (NYSE:LC) private investors stop to trade in February?
The entity reports 391.77 M of total liabilities with total debt to equity ratio (D/E) of 0.53, which is normal for its line of buisiness. The firm has a current ratio of 6.3, indicating that it is in good position to pay out its debt commitments in time. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. LendingClub has an asset utilization ratio of 10.18 percent. This suggests that the company is making $0.1 for each dollar of assets. An increasing asset utilization means that LendingClub is more efficient with each dollar of assets it utilizes for everyday operations.
LendingClub financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of LendingClub, including all of LendingClub'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 LendingClub assets, the company is considered highly leveraged. Understanding the composition and structure of overall LendingClub 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 LendingClub Total Debt

LendingClub liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. LendingClub 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 LendingClub balance sheet include debt obligations and money owed to different LendingClub vendors, workers, and loan providers. Below is the chart of LendingClub main long-term debt accounts currently reported on its balance sheet.
You can use LendingClub financial leverage analysis tool to get a better grip on understanding its financial position

How important is LendingClub's Liquidity

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

Sale by Scott Sanborn of 9043 shares of LendingClub

Legal trades by LendingClub 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:
LendingClub insider trading alert for sale of common stock by Scott Sanborn, CEO, on 15th of January 2021. This event was filed by Lendingclub Corp with SEC on 2021-01-15. Statement of changes in beneficial ownership - SEC Form 4. Scott Sanborn currently serves as chief operating and marketing officer of LendingClub [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.

Breaking down the case for LendingClub

The current indifference towards the small price fluctuations of LendingClub may encourage investors to take a closer look at the firm as it is trading at a share price of 10.56 on very low momentum in trading volume. The company executives did not add any value to LendingClub investors in December. However, most investors can still diversify their portfolios with LendingClub to hedge their inherited risk against high-volatility market scenarios. The stock standard deviation of daily returns for 30 days investing horizon is currently very low. The very small Stock volatility is a good signal to investors with longer-term investment horizons.

Our take on today LendingClub rise

Current Risk Adjusted Performance is up to 0.1. Price may slip again. LendingClub is displaying above-average volatility over the selected time horizon. Investors should scrutinize LendingClub independently to ensure intended market timing strategies are aligned with expectations about LendingClub volatility.

Our Final Takeaway

When is the right time to buy or sell LendingClub? Buying stocks such as LendingClub isn't very hard. However, what challenging for most investors is doing it at the right time. Proper market timing is something most people cannot do without sophisticated tools, which help to isolate the right opportunities, deliver winning trades and diversify portfolios on a daily basis. In closing, as of the 1st of January 2021, we believe LendingClub is currently overvalued. It very regressive towards the market and projects below average probability of distress in the next two years. Our ongoing 30 days buy-hold-sell advice on the company is Cautious Hold.

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 Raphi Shpitalnik do not own shares of LendingClub. Please refer to our Terms of Use for any information regarding our disclosure principles.

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