GreenTree Hospitality Group carries a debt of 2.06 billion, with a debt-to-equity ratio of 0.35. This is acceptable within its industry classification. The company's current ratio stands at 1.44, which is standard for the sector. While debt can support GreenTree Hospitality's operations, it could lead to problems if the company struggles to repay it, either through new capital or free cash flow. In such a scenario, shareholders could potentially lose their investment if the company fails to meet its debt obligations. Alternatively, companies like GreenTree Hospitality often issue additional shares at low prices, diluting the value for existing shareholders. However, debt can also be a valuable tool for GreenTree to invest in high-return growth. It's crucial to consider the company's use of debt in conjunction with its cash and equity.
Important Highlights
GreenTree Hospitality Group (GHG) has a robust
financial position with a significant
1.5B in Total Stockholder Equity and a healthy Free Cash Flow of
382.3M. However, the company's Total Risk Alpha of -0.45 and a negative Treynor Ratio of -0.45 indicate a high level of risk associated with the stock. This could potentially deter retail investors in May, especially those with a low risk tolerance.
GreenTree Hospitality financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of GreenTree Hospitality, including all of GreenTree Hospitality'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 GreenTree Hospitality assets, the company is considered highly leveraged. Understanding the
composition and structure of overall GreenTree Hospitality 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 GreenTree Total Liabilities
GreenTree Hospitality liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. GreenTree Hospitality 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 GreenTree Hospitality balance sheet include debt obligations and money owed to different GreenTree Hospitality vendors, workers, and loan providers. Below is the chart of GreenTree short long-term liabilities accounts currently reported on its balance sheet.
You can use GreenTree Hospitality Group
financial leverage analysis tool to get a better grip on understanding its financial position
How important is GreenTree Hospitality's Liquidity
GreenTree Hospitality
financial leverage refers to using borrowed capital as a funding source to finance GreenTree Hospitality Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. GreenTree Hospitality 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 GreenTree Hospitality'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 GreenTree Hospitality'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 GreenTree Hospitality's total debt and its cash.
What is the case for GreenTree Hospitality Investors
GreenTree Hospitality price drop over the last few months may raise some interest from stockholders. The stock closed today at a share price of
3.10 on very low momentum in trading volume. The company directors and management were not very successful in positioning the firm resources to exploit
market volatility in
March. However, diversifying your holdings with GreenTree Hospitality or similar stocks can still protect your portfolio during high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.71. The current volatility is consistent with the ongoing market swings in
March 2024 as well as with GreenTree Hospitality Group unsystematic, company-specific events.
Liabilities Breakdown
902.1 M
Total Current Liabilities
2.9 B
Non Current Liabilities Total
Non Current Liabilities Other
| Total Current Liabilities | 902.14 Million |
| Liabilities And Stockholders Equity | 3.55 Billion |
| Non Current Liabilities Total | 2.86 Billion |
| Non Current Liabilities Other | 233.15 Million |
Cash is king in the world of finance, and GreenTree Hospitality Group (GHG) seems to have a firm grasp on its throne with an end period cash flow of $905.1M. However, the company's probability of bankruptcy stands at a concerning 45.89%, which could potentially deter retail investors. Despite this, GHG's strong operating income of $407.4M and a healthy current ratio of 1.47X indicate a robust
financial health. The company's price to earnings ratio is 6.94X, which is relatively low, suggesting that the stock may be undervalued. In conclusion, while there are risks, GHG's strong
financial performance and potential undervaluation could retain its retail investors in May. .
GreenTree Hospitality has 90 percent chance to finish above $3.04 in May
GreenTree Hospitality Group's stock distribution has shown a significant shift, with kurtosis dropping to 1.61. This suggests a more normalized return distribution, reducing the likelihood of major price swings. Our analysis indicates a 90% chance that GreenTree's stock will exceed $3.04 by May's end. This forecast is based on current market dynamics and the company's recent performance, which should be considered by investors. GreenTree exhibits low volatility, with a skewness of -0.56 and kurtosis of 1.61. Understanding
market volatility trends can help investors time the market. Using volatility indicators correctly allows traders to gauge GreenTree's stock risk against market volatility during both bullish and bearish trends.
The increased volatility of bear markets can directly affect GreenTree's stock price, causing investor stress as share values drop, often leading to portfolio rebalancing. Despite the market's overall rise, GreenTree Hospitality Group's stock experienced a drop today. However, it's important to note that the company's valuation real value stands at
$3.59, indicating a potential undervaluation. The analyst overall consensus currently holds the stock, with a target price estimated value of
$4.58. This suggests a possible upside price of $5.81, which is significantly higher than the naive expected forecast value of $3.1. Therefore, while the short-term performance may be concerning, the long-term potential for GreenTree Hospitality Group remains promising. Investors should consider these factors and their own risk tolerance before making a decision. .
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Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies.
View Profile 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 GreenTree Hospitality Group. Please refer to our
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