Breaking down Pier 1 volatility decline
By Ellen Johnson | Macroaxis Story |
This perspective is geared to all Pier 1 insiders as well as to investors considering exiting their position in the firm. I will focus on the cause of why it is still reasonable for the firm to generate above-average margins and lots of cash flow. Assuming the 30 trading days horizon, Pier 1 is expected to generate 15.45 times more return on investment than the market. However, the company is 15.45 times more volatile than its market benchmark. It trades about 0.11 of its potential returns per unit of risk. The market is currently generating roughly 0.09 per unit of risk.
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Reviewed by Vlad Skutelnik
Pier 1 classifies itself under Consumer Cyclical sector and is part of Specialty Retail industry. This firm has accumulated 992.2 M in total debt. The company has a current ratio of 0.78, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due. Pier 1 holds a negative application of asset of -14.06 pct., losing $0.1406 for each dollar of asset held by the company. Inadequate asset utilization implies the company is being less effective with each dollar of asset it holds. Put it differently asset utilization of Pier 1 Imports shows how discouraging it operates for each dollar spent on its asset.
How important is Pier 1's Liquidity
Pier 1 financial leverage refers to using borrowed capital as a funding source to finance Pier 1 Imports ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Pier 1 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 Pier 1'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 Pier 1'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 Pier 1's total debt and its cash.
Pier 1 Correlation with Peers
Investors in Pier can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Pier 1 Imports. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Pier 1 and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Pier is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Pier for more details
A Deeper Perspective
Pier 1 defends 638.68 k market capitalization. Pier 1 Imports reported revenue of 1.39 B. Net Loss for the year was (310.02 M) with profit before overhead, payroll, taxes, and interest of 450.9 M. Pier 1 is selling for under 0.15. That is -11.76% down. Today the lowest price is 0.14.
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