Thinking to exit Simulations (USA Stocks:SLP) based on its current debt commitments?

SLP Stock  USD 42.51  0.27  0.64%   
Simulations Plus is scheduled to announce its earnings today. Simulations Plus Interest Coverage is very stable at the moment as compared to the past year. Simulations Plus reported last year Interest Coverage of 162.08. As of 4th of January 2023, Calculated Tax Rate is likely to grow to 24.98, while Inventory Turnover is likely to drop 5.37. As many of us are excited about health care technology space, it is fair to recap Simulations Plus as a unique alternative.
Published over a month ago
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This firm has 1.53 M in debt with debt to equity (D/E) ratio of 0.01, which may show that the firm is not taking advantage of profits from borrowing.
The entity has a beta of -0.216, which indicates not very significant fluctuations relative to the market. Let's try to break down what Simulations's beta means in this case. As returns on the market increase, returns on owning Simulations Plus are expected to decrease at a much lower rate. During the bear market, Simulations Plus is likely to outperform the market. Even though it is essential to pay attention to Simulations Plus current price movements, it is always good to be careful when utilizing equity historical returns. Our philosophy towards measuring any stock's future performance is to check both, its past performance charts as well as the business as a whole, including all available technical indicators. Simulations Plus exposes twenty-seven different technical indicators, which can help you to evaluate its performance. Simulations Plus has an expected return of -0.41%. Please be advised to validate Simulations Plus maximum drawdown, as well as the relationship between the expected short fall and day median price to decide if Simulations Plus performance from the past will be repeated at some point in the near future.
Simulations Plus financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Simulations Plus, including all of Simulations Plus'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 Simulations Plus assets, the company is considered highly leveraged. Understanding the composition and structure of overall Simulations Plus 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 Simulations Total Liabilities

Simulations Plus liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Simulations Plus 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 Simulations Plus balance sheet include debt obligations and money owed to different Simulations Plus vendors, workers, and loan providers. Below is the chart of Simulations short long-term liabilities accounts currently reported on its balance sheet.
You can use Simulations Plus financial leverage analysis tool to get a better grip on understanding its financial position

How important is Simulations Plus's Liquidity

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

An Additional Perspective On Simulations Plus

The company reported the last year's revenue of 53.91 M. Total Income to common stockholders was 12.48 M with profit before taxes, overhead, and interest of 43.08 M.

Asset Breakdown

Assets Non Current
142.5 M
Current Assets
Total Assets182.93 Million
Current Assets142.54 Million
Assets Non Current9.17 Million
Goodwill9.06 Million
Tax Assets949,192

Analysis of Simulations Plus

Recent risk adjusted performance is at -0.16.
As of the 4th of January, Simulations Plus has the risk adjusted performance of (0.16), and Coefficient Of Variation of (761.79). In relation to fundamental indicators, the technical analysis model makes it possible for you to check existing technical drivers of Simulations Plus, as well as the relationship between them. In other words, you can use this information to find out if the company will indeed mirror its model of past prices and volume data, or the prices will eventually revert. We were able to break down and interpolate nineteen technical drivers for Simulations Plus, which can be compared to its competition. Please validate Simulations Plus standard deviation, maximum drawdown, as well as the relationship between the Maximum Drawdown and expected short fall to decide if Simulations Plus is priced more or less accurately, providing market reflects its prevalent price of 38.07 per share. Given that Simulations Plus has jensen alpha of (0.38), we advise you to double-check Simulations Plus's current market performance to make sure the company can sustain itself at a future point.

Our Final Take On Simulations Plus

Although some firms in the health information services industry are either recovering or due for a correction, Simulations may not be as strong as the others in terms of longer-term growth potentials. To conclude, as of the 4th of January 2023, our final 90 days 'Buy-Sell' recommendation on the firm is Hold. We believe Simulations Plus is undervalued with close to average probability of bankruptcy for the next two years.

Editorial Staff

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 Simulations Plus. Please refer to our Terms of Use for any information regarding our disclosure principles.

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