Should you quit Resources after the recent volatility decline?
 | By Vlad Skutelnik | Macroaxis Story |
This perspective is geared to all Resources Connection 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. Considering the 30-days investment horizon, Resources Connection is expected to generate 1.21 times less return on investment than the market. In addition to that, the company is 1.95 times more volatile than its market benchmark. It trades about 0.04 of its total potential returns per unit of risk. The market is currently generating roughly 0.09 per unit of volatility. Resources Connection barely shadows the market.
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Reviewed by Raphi Shpitalnik
Resources Connection runs under null sector within null industry. The entity has 93.78 M in debt with debt to equity (D/E) ratio of 0.31, which is OK given its current industry classification. The firm has a current ratio of 1.97, which is typical for the industry and considered as normal. The company has Net Profit Margin of 4.75 %, which may imply that it executes well on its competitive polices and has a good control over its expenditures and variable costs. This is considered to be average in the sector. In the same way, it shows Net Operating Margin of 6.1 % which entails that for every 100 dollars of revenue it generated 0.06 of operating income.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Resources Connection. Your research has to be compared to or analyzed against Resources Connection's peers to derive any actionable benefits. When done correctly, Resources Connection's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Resources Connection.
Investing in Resources Connection, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Resources Connection along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Resources Connection's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
How important is Resources Connection's Liquidity
Resources Connection financial leverage refers to using borrowed capital as a funding source to finance Resources Connection ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Resources Connection 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 Resources Connection'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 Resources Connection'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 Resources Connection's total debt and its cash.
Resources Connection Gross Profit
Resources Connection Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Resources Connection 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 Resources Connection Gross Profit growth over the last 10 years. Please check Resources Connection's gross profit and other fundamental indicators for more details.
Resources Connection Correlation with Peers
Investors in Resources can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Resources Connection. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Resources Connection and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Resources 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 Resources for more details
What is driving Resources Connection Investor Appetite?
Resources Connection preserves 53.38 m of ebitda. We consider Resources Connection somewhat reliable. Resources Connection maintains Sharpe Ratio (i.e. Efficiency) of 0.0392, which implies the firm had 0.0392% of return per unit of risk over the last month. Our standpoint towards forecasting the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-eight technical indicators for Resources Connection, which you can use to evaluate future volatility of the company. Please check Resources Connection coefficient of variation of 920.88, semi deviation of 3.14, and risk adjusted performance of 0.2021 to confirm if the risk estimate we provide is consistent with the expected return of 0.14%.
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