Smith Story

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SMSI -- USA Stock  

USD 5.18  0.22  4.07%

Given the investment horizon of 90 days Smith Micro is expected to generate 4.71 times more return on investment than the market. However, the company is 4.71 times more volatile than its market benchmark. It trades about 0.08 of its potential returns per unit of risk. The DOW is currently generating roughly 0.1 per unit of risk. As many adventurous traders are excited about technology space, it is only fair to concentrate on the risk of shorting Smith Micro Software based on its current volatility spike. We will examine why it could be a different year for Smith Micro shareholders.
Published over a month ago
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Are you really shorting Smith (NASDAQ:SMSI) based on its volatility?
The company currently holds 6.53 M in liabilities with Debt to Equity (D/E) ratio of 0.11, which may suggest the firm is not taking enough advantage from borrowing. Smith Micro Software has a current ratio of 4.66, suggesting that it is liquid enough and is able to pay its financial obligations when due.
Volatility is a rate at which the price of Smith Micro 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 Smith Micro may increase or decrease. In other words, similar to Smith's beta indicator, it measures the risk of Smith Micro and helps estimate the fluctuations that may happen in a short period of time. So if prices of Smith Micro 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 Smith Micro's Liquidity

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

How Smith utilizes its cash?

To perform a cash flow analysis of Smith Micro, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Smith Micro is receiving and how much cash it distributes out in a given period. The Smith Micro cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Smith Micro Net Cash Flow from Operations is most likely to increase significantly in the upcoming years. The last year's value of Net Cash Flow from Operations was reported at 7.92 Million

Smith Micro Volatility Drivers

Smith Micro unsystematic risk is unique to Smith Micro Software 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 Smith Micro you can also buy Intuit Inc. You can also mitigate this risk by investing in the software?application 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 Smith Micro 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 Smith Micro income statement and balance sheet. Here are more details about Smith volatility.