The current year Debt to Equity Ratio is expected to grow to 1.23, whereas Average Equity is forecasted to decline to about 52.1
M. On a scale of 0 to 100, Lovesac holds a
performance score of 6. The company secures a Beta (Market Risk) of 0.068, which conveys not very significant fluctuations relative to the market. Let's try to break down what Lovesac's beta means in this case. As returns on the market increase, Lovesac returns are expected to increase less than the market. However, during the bear market, the loss on holding Lovesac will be expected to be smaller as well. Although it is vital to follow
Lovesac price patterns, it is good to be conservative about what you can do with the information regarding equity historical
price patterns. The philosophy towards estimating
future performance of any stock is to evaluate the business as a whole together with its past performance, including all
available fundamental and
technical indicators. By analyzing
Lovesac technical indicators, you can presently evaluate if the expected return of 0.37% will be sustainable into the future. Please exercises The Lovesac
variance, as well as the
relationship between the value at risk and
skewness to make a quick decision on whether Lovesac current price movements will revert.
Lovesac financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Lovesac, including all of Lovesac'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 Lovesac assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Lovesac 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 Lovesac Total Liabilities
Lovesac liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Lovesac 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 Lovesac balance sheet include debt obligations and money owed to different Lovesac vendors, workers, and loan providers. Below is the chart of Lovesac short long-term liabilities accounts currently reported on its balance sheet.
You can use The Lovesac
financial leverage analysis tool to get a better grip on understanding its financial position
How important is Lovesac's Liquidity
Lovesac
financial leverage refers to using borrowed capital as a funding source to finance The Lovesac ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Lovesac 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 Lovesac'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 Lovesac'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 Lovesac's total debt and its cash.
Another angle On Lovesac
The latest surge in Lovesac short term price appreciation may encourage shareholders to take a closer look at the firm as it is trading at a share price of
33.81 on very low momentum in trading volume. The company executives have successfully maneuvered the firm at convenient times to take advantage of all market conditions in
November. The stock standard deviation of daily returns for 30 days investing horizon is currently 3.84. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Lovesac partners.
Asset Breakdown
| Total Assets | 77.04 Million |
| Current Assets | 59.68 Million |
| Assets Non Current | 17.36 Million |
| Goodwill | 1.16 Million |
Can Lovesac build up on the latest surge?
Latest mean deviation is at 3.38. The Lovesac exhibits above-average semi-deviation for your current time horizon. We encourage investors to investigate The Lovesac individually to make sure intended market timing strategies and available technical indicagtors are consistent with their estimates about Lovesac future systematic risk.
The Bottom Line
Although some firms within the furnishings, fixtures & appliances industry are still a little expensive, even after the recent corrections, Lovesac may offer a potential longer-term growth to shareholders. On the whole, as of the 9th of December 2020, our concluding 30 days 'Buy-vs-Sell' recommendation on the firm is
Hold. We believe Lovesac is currently
overvalued with
low chance of financial distress for the next two years.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
View Profile 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 The Lovesac. Please refer to our
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