Standard Story

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SMP -- USA Stock  

USD 41.54  0.50  1.22%

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.
Published 2 days ago
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Are Standard investors ready to quit?
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. Please check the breakdown between Standard's total debt and its cash.

How Standard utilizes its cash?

To perform a cash flow analysis of Standard, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Standard is receiving and how much cash it distributes out in a given period. The Standard cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Standard Net Cash Flow from Operations is very stable at the moment as compared to the past year. Standard reported last year Net Cash Flow from Operations of 69.24 Million

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 Denso Corp. You can also mitigate this risk by investing in the auto parts 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.
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