Freightcar America currently holds roughly 54.05
M in cash with (58.91
M) of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 3.47.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Freightcar America has an asset utilization ratio of 26.65 percent. This denotes that the company is making $0.27 for each dollar of assets. An increasing asset utilization means that Freightcar America is more efficient with each dollar of assets it utilizes for everyday operations.
Investing in Freightcar America, 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 Freightcar America 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.
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of Freightcar America's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Freightcar America. Your research has to be compared to or analyzed against Freightcar America's peers to derive any actionable benefits. When done correctly, Freightcar America's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Freightcar America.
How important is Freightcar America's Liquidity
Freightcar America
financial leverage refers to using borrowed capital as a funding source to finance Freightcar America ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Freightcar America 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 Freightcar America'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 Freightcar America'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 Freightcar America's total debt and its cash.
Freightcar America Gross Profit
Freightcar America Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Freightcar America previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Freightcar America Gross Profit growth over the last 10 years. Please check Freightcar America's
gross profit and other
fundamental indicators for more details.
Freightcar America Correlation with Peers
Investors in Freightcar can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Freightcar America. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Freightcar America and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Freightcar 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 Freightcar for more details
Breaking down the case for Freightcar America
Freightcar America is very risky given 1 month investment horizon.
Freightcar America secures Sharpe Ratio (or Efficiency) of 0.19, which denotes the company had 0.19% of return per unit of risk over the last month. Our standpoint towards predicting the risk of a stock is to use both market data as well as company specific technical data. We were able to collect and analyze data for twenty-one different
technical indicators, which can help you to evaluate if expected returns of 1.48% are justified by taking the suggested risk. Use Freightcar America Coefficient Of Variation of 605.51,
downside deviation of 7.08, and Mean Deviation of 5.24 to evaluate company specific risk that cannot be
diversified away.
Will Freightcar America continue to go bonkers?
The market risk adjusted performance is down to 0.53 as of today. Freightcar America is displaying above-average volatility over the selected time horizon. Investors should scrutinize Freightcar America independently to ensure intended market timing strategies are aligned with expectations about Freightcar America volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Freightcar America'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 Freightcar America'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.
Our Takeaway on Freightcar America Investment
While some firms in the railroads industry are either recovering or due for a correction, Freightcar America may not be performing as strong as the other in terms of long-term growth potentials. On the whole, as of the 27th of March 2021, our research shows that Freightcar America is a rather very risky investment opportunity with a
below average probability of distress in the next two years. From a slightly different view, the entity currently appears to be
overvalued. Our actual 30 days 'Buy-Sell' recommendation on the company is
Hold.
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Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies.
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 Gabriel Shpitalnik do not own shares of Freightcar America. Please refer to our
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