Party Story

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PRTY -- USA Stock  

USD 2.69  0.50  15.67%

It appears Party City will continue to recover much faster as its share price surged up 28.08% today. The firm's current daily volatility is 11.5 percent, with a beta of 0.33 and an alpha of 3.17 over DOW. While some baby boomers are getting worried about aggressive defence, it is reasonable to break down Party City Holdco. Why are we still confident in our projection for a recovery.
Published over a month ago
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Is Party City (NYSE:PRTY) way too risky for millennials?
Party City Holdco currently holds roughly 154.13 M in cash with 70.55 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 1.63. Party City Holdco currently holds 2.79 B in liabilities with Debt to Equity (D/E) ratio of 374.4, indicating Party City may have difficulties to generate enough cash to satisfy its financial obligations. The entity has a current ratio of 1.1, suggesting that it may have difficulties to pay its financial obligations when due.
Investing in Party City, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Party City along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.

How important is Party City's Liquidity

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

How Party utilizes its cash?

To perform a cash flow analysis of Party City, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Party City is receiving and how much cash it distributes out in a given period. The Party City cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. Party City Net Cash Flow from Operations is fairly stable at the moment as compared to the past year. Party City reported Net Cash Flow from Operations of 43.69 Million in 2019

Party City Correlation with Peers

Investors in Party can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Party City Holdco. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Party City and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Party is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Party for more details

Acquisition by Fleiss Jennifer of 30000 shares of Party City subject to Rule 16b-3

Legal trades by Party City 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:
Party insider trading alert for grant of common stock par value $0.01 per share ("common stock") by Fleiss Jennifer, the corporate stakeholder, on 15th of September 2020. This event was filed by Party City Holdco Inc with SEC on 2020-09-15. 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.

Details

Party City is abnormally volatile given 1 month investment horizon. Party City Holdco maintains Sharpe Ratio (i.e. Efficiency) of 0.26, which implies the firm had 0.26% of return per unit of risk over the last month. Our standpoint towards forecasting the volatility of a stock is to use Party City Holdco market data together with company specific technical indicators. We have analyzed and interpolated twenty-seven different technical indicators, which can help you to evaluate if expected returns of 2.99% are justified by taking the suggested risk. Use Party City Risk Adjusted Performance of 0.428, coefficient of variation of 355.95, and Semi Deviation of 7.62 to evaluate company specific risk that cannot be diversified away.
Click cells to compare fundamentals   Check Volatility   Backtest Portfolio

Are Party City technical ratios showing a bounce back?

Party City current mean deviation rises over 8.92. Party City Holdco is displaying above-average volatility over the selected time horizon. Investors should scrutinize Party City Holdco independently to ensure intended market timing strategies are aligned with expectations about Party City volatility.

Our Final Take On Party City

While some other companies within the specialty retail industry are still a little expensive, even after the recent corrections, Party City may offer a potential longer-term growth to investors. To conclude, as of the 15th of August 2020, our primary 30 days recommendation on the company is Cautious Hold. We believe Party City is overvalued with below average odds of financial distress for the next two years.

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 Party City Holdco. Please refer to our Terms of Use for any information regarding our disclosure principles.

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