Pure Cycle Story

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PCYO -- USA Stock  

USD 11.39  0.22  1.89%

As many investors are getting excited about utilities space, it is fair to outline Pure Cycle. We will evaluate why recent Pure Cycle price moves suggest a bounce in February. Is Pure Cycle valuation justified? Here we go over the entity perspective on valuation to give you a better outlook on taking a position in this stock.
Published over two weeks ago
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The impact of latest bullish trends on Pure Cycle (NASDAQ:PCYO)
This firm currently holds 194.28 K in liabilities with Debt to Equity (D/E) ratio of 0.0, which may suggest the firm is not taking enough advantage from borrowing. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Pure Cycle has an asset utilization ratio of 36.48 percent. This suggests that the company is making $0.36 for each dollar of assets. An increasing asset utilization means that Pure Cycle is more efficient with each dollar of assets it utilizes for everyday operations.
We determine the current worth of Pure Cycle using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Pure Cycle based exclusively on its fundamental and basic technical indicators. By analyzing Pure Cycle's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Pure Cycle's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Pure Cycle. We calculate exposure to Pure Cycle's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Pure Cycle's related companies.

Pure Cycle Investment Alerts

Pure Cycle investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Pure Cycle performance across your portfolios.Please check all investment alerts for Pure Cycle

Pure Cycle Valuation Ratios as Compared to Competition

Our valuation model uses many indicators to compare Pure Cycle value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Pure Cycle competition to find correlations between indicators driving the intrinsic value of Pure Cycle.

How Pure Cycle utilizes its cash?

To perform a cash flow analysis of Pure Cycle, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Pure Cycle is receiving and how much cash it distributes out in a given period. The Pure Cycle cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Pure Cycle Net Cash Flow from Operations is quite stable at the moment as compared to the past year. The company's current value of Net Cash Flow from Operations is estimated at 20.12 Million

Acquisition by Fendel Frederick A Iii of 2000 shares of Pure Cycle subject to Rule 16b-3

Legal trades by Pure Cycle 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:
Pure Cycle insider trading alert for grant of common stock by Fendel Frederick A Iii, the corporate stakeholder, on 22nd of January 2021. This event was filed by Pure Cycle Corp with SEC on 2021-01-22. Statement of changes in beneficial ownership - SEC Form 4 [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 Pure Cycle Indicators

The company reported the previous year's revenue of 25.86 M. Net Income was 6.75 M with profit before overhead, payroll, taxes, and interest of 8.91 M.

Margins Breakdown

Pure Cycle profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Pure Cycle itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Pure Cycle profit margins.
Profit Margin
Operating Margin
Operating Margin5.68
EBITDA Margin39.29
Gross Margin41.21
Profit Margin25.35

Pure Cycle Average Assets is decreasing over the last 8 years. Moreover, Pure Cycle Earnings Before Interest Taxes and Depreciation Amortization EBITDA is increasing over the last 8 years.

Pure Cycle is expecting lower volatility in February

The mean deviation is down to 1.72 as of today. Pure Cycle currently demonstrates below-verage downside deviation. It has Information Ratio of 0.09 and Jensen Alpha of 0.19. However, we do advice investors to further question Pure Cycle expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Conclusion on Pure Cycle

Whereas other entities within the utilities?regulated water industry are still a little expensive, even after the recent corrections, Pure Cycle may offer a potential longer-term growth to institutional investors. In closing, as of the 5th of January 2021, our analysis shows that Pure Cycle almost mirrors the market. The company is overvalued and projects below average chance of financial distress for the next 2 years. However, our actual 30 days recommendation on the company is Buy.

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 Ellen Johnson do not own shares of Pure Cycle. Please refer to our Terms of Use for any information regarding our disclosure principles.

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