Liberty Story

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LILA -- USA Stock  

USD 13.88  0.01  0.07%

Liberty Latin is currently does not generate positive expected returns and assumes 2.5363% risk (volatility on return distribution) over the 90 days horizon. While some of us are excited about communication services space, it makes sense to go over Liberty Latin in greater detail to make a better estimate of its risk and reward. We will analyze if the expected returns on Liberty Latin will justify its current volatility. Liberty Latin's low volatility may still impact the value of the stock as we estimate it as currently undervalued. The real value, based on our analysis, is getting close to 12.64 per share.
Published over a month ago
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Is Liberty Latin (NASDAQ:LILA) a good hedge for your existing portfolios?
Liberty Latin America currently holds 9 B in liabilities with Debt to Equity (D/E) ratio of 2.55, implying Liberty Latin greatly relies on financing operations through barrowing. The entity has a current ratio of 1.49, which is within standard range for the sector.
Volatility is a rate at which the price of Liberty Latin 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 Liberty Latin may increase or decrease. In other words, similar to Liberty's beta indicator, it measures the risk of Liberty Latin and helps estimate the fluctuations that may happen in a short period of time. So if prices of Liberty Latin 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 Liberty Latin's Liquidity

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

How Liberty utilizes its cash?

To perform a cash flow analysis of Liberty Latin, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Liberty Latin is receiving and how much cash it distributes out in a given period. The Liberty Latin cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Liberty Latin Net Cash Flow from Operations is projected to increase significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at 640.1 Million

Liberty Latin Volatility Drivers

Liberty Latin unsystematic risk is unique to Liberty Latin America 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 Liberty Latin you can also buy Korea Telecom Corp. You can also mitigate this risk by investing in the telecom services 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 Liberty Latin 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 Liberty Latin income statement and balance sheet. Here are more details about Liberty volatility.
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