Are Standard investors ready to quit?
 | By Ellen Johnson | Macroaxis Story |
Standard is generating negative expected returns assuming volatility of 2.8362% on return distribution over 60 days investment horizon. As many adventurous traders are excited about consumer cyclical space, it is only fair to recap the risk of shorting Standard Motor Products based on its current volatility spike. We are going to focus on if the current expected returns justify Standard's volatility. Standard's low volatility may still impact the value of the stock as we estimate it as currently undervalued. The real value, based on our analysis, is getting close to 44.74 per share.
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Reviewed by Vlad Skutelnik
Standard Motor Products has roughly 16.78 M in cash with 112.43 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 0.75. Volatility is a rate at which the price of Standard 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 Standard may increase or decrease. In other words, similar to Standard's beta indicator, it measures the risk of Standard and helps estimate the fluctuations that may happen in a short period of time. So if prices of Standard 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 Standard's Liquidity
Standard financial leverage refers to using borrowed capital as a funding source to finance Standard Motor Products ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Standard 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 Standard'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 Standard'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 Standard's total debt and its cash.
Standard Gross Profit
Standard Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Standard 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 Standard Gross Profit growth over the last 10 years. Please check Standard's gross profit and other fundamental indicators for more details.
Standard Volatility Drivers
Standard unsystematic risk is unique to Standard Motor Products 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 Standard you can also buy Douglas Dynamics. You can also mitigate this risk by investing in the consumer discretionary 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 Standard 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 Standard income statement and balance sheet. Here are more details about Standard volatility.Click cells to compare fundamentals
Breaking it down
Standard Motor Products reported the last year's revenue of 1.09 B. Total Income to common stockholders was 70.41 M with profit before taxes, overhead, and interest of 331.8 M.
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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 Ellen Johnson do not own shares of Standard Motor Products. Please refer to our Terms of Use for any information regarding our disclosure principles.