Will Limoneira (NASDAQ:LMNR) latest volatility force retail investors to drop?

16% of stocks are less volatile than Limoneira, and 98% of all traded equity instruments are projected to make higher returns than the company over the 90 days investment horizon. Although many risk-takers are getting more into consumer defensive space, some of us are not very happy with Limoneira's current volatility. We will evaluate if Limoneira's current volatility will continue into July. Limoneira's very low volatility may have no significant impact on the stock's value as we estimate Limoneira as currently undervalued. The real value, based on our calculations, is getting close to 22.44 per share.
Published over a year ago
View all stories for Limoneira | View All Stories
Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.

Reviewed by Michael Smolkin

The entity currently holds 137.02 M in liabilities with Debt to Equity (D/E) ratio of 0.68, which is about average as compared to similar companies. The firm has a current ratio of 1.4, which is within standard range for the sector.
Volatility is a rate at which the price of Limoneira 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 Limoneira may increase or decrease. In other words, similar to Limoneira's beta indicator, it measures the risk of Limoneira and helps estimate the fluctuations that may happen in a short period of time. So if prices of Limoneira 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 Limoneira's Liquidity

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

Limoneira Volatility Drivers

Limoneira unsystematic risk is unique to Limoneira 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 Limoneira you can also buy Everest Consolidator Acquisition. You can also mitigate this risk by investing in the consumer staples 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 Limoneira 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 Limoneira income statement and balance sheet. Here are more details about Limoneira volatility.
0.670.430.590.810.810.890.10.8-0.05-0.18-0.65-0.19-0.320.440.190.54-0.55
0.670.180.830.70.420.390.010.30.370.39-0.380.060.010.310.080.2-0.42
0.430.180.420.720.140.15-0.540.110.23-0.64-0.51-0.28-0.350.05-0.670.280.47
0.590.830.420.720.260.27-0.190.170.250.0-0.620.050.10.31-0.160.43-0.15
0.810.70.720.720.490.49-0.160.390.23-0.23-0.59-0.27-0.340.33-0.210.43-0.13
0.810.420.140.260.490.860.280.84-0.22-0.09-0.37-0.03-0.260.220.360.25-0.67
0.890.390.150.270.490.860.290.94-0.34-0.22-0.52-0.19-0.320.470.460.55-0.71
0.10.01-0.54-0.19-0.160.280.290.36-0.510.20.210.130.160.250.720.18-0.5
0.80.30.110.170.390.840.940.36-0.42-0.25-0.35-0.28-0.410.470.530.41-0.64
-0.050.370.230.250.23-0.22-0.34-0.51-0.420.460.1-0.1-0.12-0.24-0.63-0.450.23
-0.180.39-0.640.0-0.23-0.09-0.220.2-0.250.460.40.250.26-0.130.26-0.46-0.36
-0.65-0.38-0.51-0.62-0.59-0.37-0.520.21-0.350.10.40.060.17-0.310.17-0.730.09
-0.190.06-0.280.05-0.27-0.03-0.190.13-0.28-0.10.250.060.71-0.330.01-0.23-0.11
-0.320.01-0.350.1-0.34-0.26-0.320.16-0.41-0.120.260.170.71-0.520.11-0.040.0
0.440.310.050.310.330.220.470.250.47-0.24-0.13-0.31-0.33-0.520.30.54-0.35
0.190.08-0.67-0.16-0.210.360.460.720.53-0.630.260.170.010.110.30.2-0.74
0.540.20.280.430.430.250.550.180.41-0.45-0.46-0.73-0.23-0.040.540.2-0.19
-0.55-0.420.47-0.15-0.13-0.67-0.71-0.5-0.640.23-0.360.09-0.110.0-0.35-0.74-0.19
Click cells to compare fundamentals

Breaking it down a bit more

Limoneira reported the previous year's revenue of 161.18 M. Net Loss for the year was (14.76 M) with profit before overhead, payroll, taxes, and interest of 2.77 M.

Our perspective of the latest Limoneira spike

The downside deviation is down to 1.84 as of today. Limoneira has relatively low volatility with skewness of 0.87 and kurtosis of 2.18. However, we advise all investors to independently investigate Limoneira to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Limoneira's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Limoneira's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

The Bottom Line

While some other companies within the farm products industry are still a little expensive, even after the recent corrections, Limoneira may offer a potential longer-term growth to retail investors. On the whole, as of the 8th of June 2021, our primary 90 days buy-or-sell advice on the enterprise is Buy. We believe Limoneira is currently undervalued with below average chance of distress for the next two years.

Building efficient market-beating portfolios requires time, education, and a lot of computing power!

The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.

Try AI Portfolio Architect

Editorial Staff

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 Limoneira Co. Please refer to our Terms of Use for any information regarding our disclosure principles.

Would you like to provide feedback on the content of this article?

You can get in touch with us directly or send us a quick note via email to editors@macroaxis.com