Are STRATA Skin (USA Stocks:SSKN) unfluctuating forward-looking signals contributing to the recent decline?

STRATA Skin Sciences (SSKN), a healthcare company specializing in health care equipment and supplies, has been experiencing a recent decline in its stock value. This decline may be attributed to the company's future projections, which appear to be quite steady but not necessarily promising. The company's current ratio stands at 1.30X, indicating a decent liquidity position. However, the company's return on assets is at a loss of 0.09, and its net income shows a significant loss of $10.8M. The company's high selling and marketing expenses of $13M, coupled with a cost of revenue of $14.9M, further contribute to the financial strain. STRATA's long-term debt stands at $15M, and its probability of bankruptcy is alarmingly high at 95.52%. The company's enterprise value is currently at $22.2M, and its stock-based compensation is $1.3M. Despite these challenges, STRATA maintains a working capital of $3.37M and has seen a change in cash of $1.3M. However, with a debt to equity ratio of just 0.35% and shares owned by insiders at 6.55%, it's clear that the company's financial health is in a precarious state. Currently, STRATA Skin Sciences' Inventory Turnover remains stable compared to the previous year. As of June 8, 2024, the Capex to Operating Cash Flow is projected to increase to 10.15, while the Price to Sales Ratio is expected to decrease to 5.47. The stock is experiencing above-average trading volumes. Despite concerns in the healthcare equipment and supplies sector, it's worthwhile to review STRATA Skin Sciences based on its current fundamentals. There are still compelling reasons why the company could generate above-average returns. However, the company's current distress odds exceed 80%. The question remains: are STRATA Skin investors maintaining their optimism?
Published over a week ago
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Reviewed by Ellen Johnson

Despite STRATA Skin Sciences' (SSKN) steady future projections, the recent decline in its stock value may be attributed to a couple of fundamental factors. Firstly, the company's negative return on assets of -0.09 indicates inefficiency in generating profits from its assets. Secondly, the company's long-term debt of $15M compared to its current assets of $9.39M raises concerns about its ability to meet its obligations. These factors, combined with a decrease in working capital of $69K, could be contributing to investor skepticism, leading to the recent stock decline.

Main Points

STRATA Skin Sciences has a beta of -0.93, suggesting potential diversification benefits for a portfolio. As the market grows more bullish, returns from STRATA Skin are likely to decrease gradually. Conversely, during market instability, STRATA Skin may slightly outperform. Currently, STRATA Skin Sciences has a projected negative return of -0.7%. It's crucial to verify STRATA Skin's maximum drawdown and accumulation distribution, as well as the correlation between the Accumulation Distribution and Market Facilitation Index. This analysis will help determine if STRATA Skin Sciences' past performance will repeat in the future.
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 STRATA Skin income statement, its balance sheet, and the statement of cash flows. Potential STRATA Skin investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although STRATA Skin investors may use each financial statement separately, they are all related. The changes in STRATA Skin's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on STRATA Skin'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 STRATA Skin fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of STRATA Skin performance into the future periods or doing a reasonable stock valuation. The intrinsic value of STRATA Skin shares is the value that is considered the true value of the share. If the intrinsic value of STRATA 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 STRATA Skin. Please read more on our fundamental analysis page.

How effective is STRATA Skin in utilizing its assets?

STRATA Skin Sciences reports assets on its Balance Sheet. It represents the amount of STRATA resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, STRATA Skin 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 Health Care Equipment & Supplies space. To get a better handle on how balance sheet or income statements item affect STRATA volatility, please check the breakdown of all its fundamentals.

Are STRATA Skin Earnings Expected to grow?

The future earnings power of STRATA Skin involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of STRATA Skin factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. STRATA Skin 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 STRATA expected earnings.

STRATA Skin Gross Profit

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

A Deeper Perspective On STRATA Skin

Institutional investors typically avoid acquiring a high percentage of STRATA Skin 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 STRATA is distributed among investors.

Ownership Allocation

The market capitalization of STRATA Skin is $10.94 Million. Over half of STRATA Skin's outstanding shares are owned by institutional holders. These institutional holders are typically referred to as corporate investors that take positions in a given instrument to benefit from reduced trade commissions. Note, that even with negative profits, if the true value of the company is larger than the current market value, you may still be able to generate positive returns on investment in this company.
Retail Investors
27.15%
Insiders
6.55%
Institutions
66.3%
Retail Investors27.15
Insiders6.55
Institutions66.3
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 STRATA Skin'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 STRATA Skin's decisions due to their larger holdings.
 2021 2022 2023 2024 (projected)
Payables Turnover3.594.24.463.0
Days Of Inventory On Hand125.75140.6765.4962.22

Asset Utilization

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. STRATA Skin has an asset utilization ratio of 79.39 percent. This suggests that the Company is making $0.79 for each dollar of assets. An increasing asset utilization means that STRATA Skin Sciences is more efficient with each dollar of assets it utilizes for everyday operations.
Non Current Assets Total
27.8 M
Total Current Assets
17.2 M
Non Current Assets Total27.8 Million47.57
Total Current Assets17.18 Million29.4
Non Currrent Assets Other304,8280.52
Other Current Assets519,0570.89
Other Assets301,5220.52
Intangible Assets5.58 Million9.56
Net Tangible Assets6.74 Million11.54
As Warren Buffet once said, "Price is what you pay, value is what you get." STRATA Skin Sciences (SSKN) has been experiencing a decline in stock price despite steady future projections. The company's current ratio of 1.30X and end period cash flow of $8.1M indicate a healthy liquidity position. However, the company's net income shows a loss of $10.8M, and a negative operating income of $6.3M, which could be contributing to the stock's recent decline. Despite these challenges, the company's market risk adjusted performance of 0.7227 suggests that it has the potential to deliver value in the long run.

STRATA Skin implied volatility may change after the roll up

STRATA Skin Sciences' recent Jensen Alpha, a risk-adjusted measure of stock's excess return, is -0.67, indicating market underperformance. This suggests a potential shift in the company's implied volatility following the roll-up. Investors should closely monitor this, as increased volatility could present both risks and opportunities. While it may cause larger price swings, it could also offer significant returns if timed correctly. STRATA Skin Sciences shows very low volatility with skewness of -0.19 and kurtosis of 1.63. Understanding market volatility trends can help investors time the market.
Using volatility indicators properly allows traders to measure STRATA Skin's stock risk against market volatility during both bullish and bearish trends. The increased volatility of bear markets can impact STRATA Skin's stock price and stress investors as they watch their shares' value decrease, often leading to portfolio rebalancing.In conclusion, STRATA Skin Sciences has shown a strong performance today, but whether it will surge is contingent on several factors. The Analyst Overall Consensus is a 'Buy', with the Analyst Highest Estimated Target Price at $4.33 and the Lowest Estimated Target Price at $3.55. This suggests a potential upside from the current Valuation Market Value of $3.12. However, investors should also consider the Valuation Real Value of $3.01, which is slightly below the market value. With the fiscal year ending in December, investors should keep a close eye on the company's upcoming financial reports. While there is one hold and one strong buy among analysts, the overall sentiment leans towards a positive outlook for STRATA Skin Sciences..

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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 Raphi Shpitalnik do not own shares of STRATA Skin Sciences. Please refer to our Terms of Use for any information regarding our disclosure principles.

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