Asset Breakdown
7.2 M
Assets Non Current
31.1 M
Current Assets
| Total Assets | 38.25 Million | |
| Current Assets | 31.06 Million | |
| Assets Non Current | 7.19 Million | |
| Goodwill | 208,202 | |
| Tax Assets | 826,117 |
Continue to hold Loop (USA Stocks:LOOP) based on its current debt obligations?
 | By Vlad Skutelnik | Macroaxis Story |
Cash is king in the realm of investing, and Loop Industries (LOOP) is sitting on a throne with a begin period cash flow of $44.1M. Despite a net income loss of $21.3M, Loop's strong cash position and minimal short long term debt of $3.3M provide the company with the financial flexibility it needs to navigate through any potential economic downturns. Further, with total current liabilities at $3.6M and net invested capital of $37M, the company's debt obligations are easily manageable. Even with an EBIT of a loss of $38.1M, the company's solid financial footing is clear. The analyst overall consensus is a 'Strong Buy', with one analyst even setting a lowest estimated target price of $6. With 47.4M common stock shares outstanding, Loop's stock is an attractive opportunity for investors in the Specialty Chemicals industry. Thus, it would be prudent to maintain your position in Loop Industries amidst its favorable debt obligation outlook. Loop Industries is set to announce its earnings tomorrow, with the subsequent financial report anticipated on May 16, 2024. Currently, Loop Industries' Issuance Repayment of Debt Securities remains relatively stable compared to the previous year. As of January 14, 2024, Share-Based Compensation is projected to increase to approximately $4.3 million, while Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is expected to decrease to -$12.4 million. As many millennials are steering clear of the chemicals sector, it is prudent to delve deeper into Loop Industries and attempt to comprehend its current market trends. Let's explore whether Loop Industries' shares are reasonably priced as we enter February.
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Reviewed by Gabriel Shpitalnik
Loop Industries currently has 3.3 million in liabilities, with a Debt to Equity (D/E) ratio of 0.12. This suggests that Loop Industries may not be leveraging borrowing to its full potential. The company's current ratio stands at 4.44, indicating that it has sufficient liquidity to meet its financial obligations as they come due. While debt can be a useful tool for Loop Industries, problems may arise if the company struggles to pay it off, either through new capital or free cash flow. In such a scenario, Loop Industries' shareholders could potentially lose everything if the company fails to meet its legal debt repayment obligations. However, a more common scenario is when companies like Loop Industries issue additional shares at discounted prices, thereby diluting the value of existing shares. In this context, debt can be a more effective tool for Loop Industries to invest in high-return growth opportunities. When evaluating Loop Industries' use of debt, it's important to consider it in conjunction with cash and equity.
Main Takeaways
Loop Industries (USA Stocks: LOOP) is a promising investment opportunity, particularly when considering its debt obligations. The company's long-term debt is a manageable 3.2M, which is relatively low compared to its capital surplus of 170.4M. This suggests that the company has a strong financial position and is not overly reliant on debt to finance its operations. Furthermore, the company has demonstrated a positive Jensen Alpha of 0.0985, indicating that it has generated a return that exceeds its expected risk-adjusted return. This suggests that the company has effectively managed its risks and has the potential to provide a favorable return on investment. Therefore, investors should maintain their positions in Loop Industries due to its favorable debt obligation outlook. Loop Industries financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Loop Industries, including all of Loop Industries'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 Loop Industries assets, the company is considered highly leveraged. Understanding the composition and structure of overall Loop Industries 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.Watch out for price decline
Please consider monitoring Loop Industries on a daily basis if you are holding a position in it. Loop Industries is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Loop Industries stock to be traded above the $1 level to remain listed. If Loop Industries stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.
Understanding Loop Total Liabilities
Loop Industries liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Loop Industries 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 Loop Industries balance sheet include debt obligations and money owed to different Loop Industries vendors, workers, and loan providers. Below is the chart of Loop short long-term liabilities accounts currently reported on its balance sheet. You can use Loop Industries financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Loop Industries's Liquidity
Loop Industries financial leverage refers to using borrowed capital as a funding source to finance Loop Industries ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Loop Industries 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 Loop Industries' 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 Loop Industries' 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 Loop Industries's total debt and its cash.
A Deeper look at Loop
The entity reported the previous year's revenue of 172.84 K. Net Loss for the year was (21.3 M) with profit before overhead, payroll, taxes, and interest of 0.
"Never put all your eggs in one basket," is a common saying in the finance world, and it rings true when considering your position in Loop Industries (USA Stocks: LOOP). Despite the company's net income loss of $21.3M, there are several positive indicators that suggest maintaining your position could be a wise move. The company's total debt stands at a manageable $3.3M, indicating a favorable debt obligation outlook.This is further supported by a low debt to equity ratio of 0.12%, suggesting that the company is not overly reliant on borrowing to finance its growth. Additionally, Loop Industries' net assets of $40.56M and net tangible assets of $32.5M provide a solid financial foundation. While the company's operating expenses and negative cash flow from operating activities are areas of concern, the specialty chemicals industry is known for its high capital expenditure. Therefore, it's crucial to keep a balanced view of the company's financial health. .
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