How Solid Power (USA Stocks:SLDP) weak fundamental indicators helped with the latest fall?

Solid Power, with a beta of 1.7, carries a relatively high risk compared to the market. It's expected to outperform when the market rises, but likely to underperform during market downturns. Currently, Solid Power anticipates a negative return of -0.23%. It's crucial to verify Solid Power's maximum drawdown and the correlation between the expected shortfall and the rate of daily change. This will help determine if Solid Power's past performance will recur in the near future.

Main Ideas

Despite Solid Power's (USA Stocks: SLDP) recent decline, the company's fundamentals reveal hidden value. With a book value per share of 2.69X and a net asset value of $539.17M, the company's intrinsic value appears to be undervalued given its current valuation of $160.11M. However, investors should be cautious as the company reported a net income loss of $47M from continuing operations, indicating potential financial instability.
Published over two weeks ago
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Reviewed by Vlad Skutelnik

Every cloud has a silver lining, and Solid Power's recent decline might just be that silver lining for value investors. Despite the weak fundamental indicators, the company's stock (USA Stocks: SLDP) traded on NASDAQ, presents a hidden value. With a current valuation of $160.11M, the company's total revenue stands at $17.4M, which is dwarfed by its net invested capital of $503.3M. The company's return on assets is a loss of 0.11, and it has retained earnings of a loss of $84.6M. However, Solid Power holds a significant amount of cash and short-term investments, amounting to $176M. The company's beta of 1.8 indicates a higher volatility compared to the market, which could be a potential risk or reward for investors. The price to book ratio of 0.5767 suggests that the stock might be undervalued. With 23.03% of shares owned by insiders and 15.6M shares shorted, the market sentiment seems to be negative. However, this could lead to a short squeeze, providing an opportunity for investors. Despite the negative free cash flow of $93.3M and operating income of a loss of $90.6M, the company's valuation real value stands at $2.13, indicating a possible upside. Therefore, despite the weak fundamentals, Solid Power's recent decline might be an opportunity for value investors. Currently, Solid Power's Revenue Per Share remains relatively stable compared to the previous year. As of 06/28/2024, the Interest Debt Per Share is expected to rise to 0.05, while the Book Value Per Share may decrease to 1.52. Given these factors, it may not be the best time to invest in Solid Power. The company's current probability of distress is less than 23%. It remains to be seen whether retail investors will maintain their optimism or if a sell-off is imminent.
Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Solid Power income statement, its balance sheet, and the statement of cash flows. Potential Solid Power investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Solid Power investors may use each financial statement separately, they are all related. The changes in Solid Power's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Solid Power's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Solid Power fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Solid Power performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Solid Power shares is the value that is considered the true value of the share. If the intrinsic value of Solid is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Solid Power. Please read more on our fundamental analysis page.

How effective is Solid Power in utilizing its assets?

Solid Power reports assets on its Balance Sheet. It represents the amount of Solid resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Solid Power aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Industrial Machinery & Supplies & Components space. To get a better handle on how balance sheet or income statements item affect Solid volatility, please check the breakdown of all its fundamentals.

Are Solid Power Earnings Expected to grow?

The future earnings power of Solid Power involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Solid Power factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Solid Power stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Solid expected earnings.

Solid Power Gross Profit

Solid Power Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Solid Power 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 Solid Power Gross Profit growth over the last 10 years. Please check Solid Power's gross profit and other fundamental indicators for more details.

Is Solid Power valued sensibly by the market?

Although in the United States, the Securities and Exchange Commission has enforced strong rules to prevent insiders from engaging in insider trading, finding insiders among active shareholders of Solid Power is not uncomon. Institutional investors typically avoid acquiring a high percentage of Solid Power stocks because performing such an act may violate securities laws. They are usually not investing their own money, but rather making investments on behalf of their clients. Let's take a look at how the ownership of Solid is distributed among investors.

Ownership Allocation

Solid Power shows a total of 177.05 Million outstanding shares. Solid Power maintains significant amount of outstanding shares owned by insiders. An insider is usually defined as a CEO, other corporate executive, director, or institutional investor who own at least 10% of the company's outstanding shares. Please note that no matter how many assets the company owns, if the real value of the company is less than the current market value, you may not be able to make money on it.
Retail Investors
50.73%
Insiders
23.03%
Institutions
26.24%
Retail Investors50.73
Insiders23.03
Institutions26.24
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence Solid Power's decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over Solid Power's decisions due to their larger holdings.
 2021 2022 2023 2024 (projected)
Days Sales Outstanding111.5756.9732.5664.41
Ptb Ratio2.620.80.510.49

Asset Utilization

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Solid Power has an asset utilization ratio of 3.23 percent. This connotes that the Company is making $0.0323 for each dollar of assets. An increasing asset utilization means that Solid Power is more efficient with each dollar of assets it utilizes for everyday operations.
Net Tangible Assets
669.3 M
Non Current Assets Total
373.9 M
Net Tangible Assets669.27 Million51.65
Non Current Assets Total373.86 Million28.85
Non Currrent Assets Other1.11 Million0.0859
Other Current Assets2.88 Million0.22
Total Current Assets246.83 Million19.05
Intangible Assets845,1860.0652
Other Assets962,5000.0743
As Warren Buffet once wisely noted, be fearful when others are greedy and greedy when others are fearful. Solid Power (USA Stocks: SLDP), an Electrical Equipment & Parts industry player, has recently experienced a decline, which could be a potential opportunity for value investors. Despite weak fundamental indicators such as an operating income loss of $90.6M and a negative return on assets of 0.11, the company boasts a strong current ratio of 36.06X, indicating its ability to meet short-term obligations. Moreover, with a market capitalization of $297.44M and net assets worth $539.17M, the company's Price to Book ratio stands at a mere 0.58X, suggesting that the stock might be undervalued. Therefore, amidst the recent decline, Solid Power may present a hidden value for discerning investors.

Another small fall for Solid Power

Solid Power, a prominent player in the public trading market, has experienced a slight decrease in skewness to 0.97. This minor shift could suggest a potential drop in volatility, potentially leading to a more stable trading environment for the stock. Despite this dip, Solid Power continues to show resilience and remains a solid investment option. Investors should monitor the stock's performance closely, as this could be an ideal time to capitalize on its stability. As of June 28, Solid Power has a Semi Deviation of 2.96, a risk-adjusted performance of 0.016, and a Coefficient Of Variation of 8462.05.
The technical analysis model allows for the examination of Solid Power's current technical drivers and their interrelationships in relation to fundamental indicators.In conclusion, Solid Power presents a compelling investment opportunity. The analyst overall consensus is a 'Buy', with the highest estimated target price reaching $3.89. This suggests a significant potential upside from the current market valuation of $1.65. Furthermore, the possible upside price is a staggering $5.12, indicating a substantial return potential. However, investors should also consider the possible downside price of $0.0165 and the fact that there are three holds among the analysts. As the fiscal year end approaches in December, it would be prudent to keep a close eye on Solid Power's performance..

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Editorial Staff

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