Should you quit Rockwell Medical (NASDAQ:RMTI) after the current volatility rise?

RMTI Stock  USD 1.90  0.09  4.52%   
Given the investment horizon of 60 days Rockwell Medical is expected to under-perform the market. In addition to that, the company is 3.4 times more volatile than its market benchmark. It trades about -0.2 of its total potential returns per unit of risk. The DOW is currently generating roughly 0.0 per unit of volatility. While some of us are excited about healthcare space, it makes sense to concentrate on Rockwell Medical in greater detail to make a better estimate of its risk and reward. We will go over odds for Rockwell Medical to generate above-average margins next quarter. The current above-average Rockwell Medical's volatility may impact the value of the stock as we project Rockwell Medical as currently undervalued. The real value, according to our calculations, is approaching 2.02 per share.
Published over two months ago
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The company currently holds 23.89 M in liabilities with Debt to Equity (D/E) ratio of 1.19, which is about average as compared to similar companies. Rockwell Medical has a current ratio of 2.5, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Rockwell Medical until it has trouble settling it off, either with new capital or with free cash flow. So, Rockwell Medical's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Rockwell Medical sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Rockwell to invest in growth at high rates of return. When we think about Rockwell Medical's use of debt, we should always consider it together with cash and equity.
Volatility is a rate at which the price of Rockwell Medical or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Rockwell Medical may increase or decrease. In other words, similar to Rockwell's beta indicator, it measures the risk of Rockwell Medical and helps estimate the fluctuations that may happen in a short period of time. So if prices of Rockwell Medical fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Rockwell Medical's Liquidity

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

How does Rockwell utilize its cash?

To perform a cash flow analysis of Rockwell Medical, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Rockwell Medical is receiving and how much cash it distributes out in a given period. The Rockwell Medical cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Rockwell Medical Net Cash Flow from Operations is decreasing as compared to previous years. The last year's value of Net Cash Flow from Operations was reported at (38.56 Million)

Rockwell Medical Volatility Drivers

Rockwell Medical unsystematic risk is unique to Rockwell Medical and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Rockwell Medical you can also buy Nano One Materials. You can also mitigate this risk by investing in the health care sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Rockwell Medical important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Rockwell Medical income statement and balance sheet. Here are more details about Rockwell volatility.
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