Secureworks Stock Story

SCWX

Stock

USD 10.14 0.03 0.29%

Macroaxis Story

Secureworks Corp is scheduled to announce its earnings today. As many investors are getting excited about technology space, it is fair to break down Secureworks Corp CS as an investment option. We will analyze why Secureworks Corp investors may still consider a stake in the business. Here we also measure the ability of Secureworks Corp to meet its long-term debt obligations, such as interest payments on debt, the final principal payment on the debt, and any other fixed obligations like lease payments.

Published over two months ago

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Will Secureworks Corp (NASDAQ:SCWX) debt increase in July 2022?

Secureworks Corp currently holds 22.83 M in liabilities with Debt to Equity (D/E) ratio of 0.04, which may suggest Secureworks Corp is not taking enough advantage from borrowing. The entity has a current ratio of 1.23, suggesting that it may have difficulties to pay its financial obligations when due. Debt can assist Secureworks Corp until it has trouble settling it off, either with new capital or with free cash flow. So, Secureworks Corp'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 Secureworks Corp sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Secureworks to invest in growth at high rates of return. When we think about Secureworks Corp's use of debt, we should always consider it together with cash and equity.

Secureworks Corp financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Secureworks Corp, including all of Secureworks Corp'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 Secureworks Corp assets, the company is considered highly leveraged. Understanding the composition and structure of overall Secureworks Corp 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 Secureworks Total Debt

Secureworks Corp liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Secureworks Corp 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 Secureworks Corp balance sheet include debt obligations and money owed to different Secureworks Corp vendors, workers, and loan providers. Below is the chart of Secureworks main long-term debt accounts currently reported on its balance sheet.

You can use Secureworks Corp CS financial leverage analysis tool to get a better grip on understanding its financial position

How important is Secureworks Corp's Liquidity

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

Payment of 6753 shares by Hanna George B of Secureworks Corp subject to Rule 16b-3

Legal trades by Secureworks Corp 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:

Secureworks insider trading alert for payment of class a common stock by Hanna George B, Chief Legal & Admin Officer, on 28th of July 2022. This event was filed by Secureworks Corp with SEC on 2022-07-28. 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.

Another Outlook On Secureworks Corp

The current Secureworks Corp price slide created some momentum for investors as it was traded today as low as 11.58 and as high as 12.55 per share. The company directors and management were unable to exploit market volatilities in May. However, diversifying your overall positions with Secureworks Corp CS can protect your principal portfolio during market swings. The stock standard deviation of daily returns for 90 days investing horizon is currently 4.7. This high volatility is attributed to the latest market swings and not-so-good earnings reports for some of the Secureworks Corp partners.

Our Secureworks analysis suggests possible reversion in July

Current Risk Adjusted Performance is up to -0.08. Price may slide again. Secureworks Corp CS exhibits very low volatility with skewness of 2.05 and kurtosis of 11.75. However, we advise investors to further study Secureworks Corp CS technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Secureworks Corp'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 Secureworks Corp'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.

Secureworks Corp Implied Volatility

Secureworks Corp's implied volatility exposes the market's sentiment of Secureworks Corp CS stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Secureworks Corp's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Secureworks Corp stock will not fluctuate a lot when Secureworks Corp's options are near their expiration.

The Current Takeaway on Secureworks Corp Investment

While some other entities in the software—infrastructure industry are either recovering or due for a correction, Secureworks Corp may not be performing as strong as the other in terms of long-term growth potentials. The inconsistency in the assessment between current Secureworks valuation and our trade advice on Secureworks Corp is due to the recent market swings and your selection of investing horizon. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Secureworks Corp.

Editorial Staff

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 Secureworks Corp CS. Please refer to our Terms of Use for any information regarding our disclosure principles.

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