Should you trade your Alkaline Water (USA Stocks:WTER) holdings?
 | By Rifka Kats | Macroaxis Story |
The market is a pendulum that forever swings between unsustainable optimism and unjustified pessimism. The Alkaline Water Company (NASDAQ: WTER), a player in the Beverages - Non-Alcoholic industry, seems to be swinging towards the latter. With a negative return on assets of 0.52 and a net income from continuing operations showing a loss of $27.4M, the company's financial health appears to be in a precarious state. The company's total revenue stands at $63.8M, but the cost of revenue is not far behind at $52.1M, leaving a thin margin for profit. Furthermore, the company's enterprise value revenue is a mere 0.189, indicating a low valuation. The stock's beta of 1.993 suggests it's more volatile than the market, and its standard deviation of 6.93 and variance of 48.05 further underscore the risk. Despite the analyst overall consensus being a 'Strong Buy', the negative skewness of -0.41 and a possible downside price of 0.003 may give investors pause. With shares short in the prior month at 841.6K, it might be time to consider shorting WTER. However, as always, potential investors should carefully evaluate their risk tolerance and investment strategies before making a decision. Alkaline Water is set to announce its earnings today, with the subsequent financial report anticipated on February 27, 2024. Given the growing interest in the beverage sector, it is prudent to delve deeper into Alkaline Water's financials. We will assess whether Alkaline Water's shares are reasonably valued in light of the current economic climate.
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Reviewed by Raphi Shpitalnik
The average rating for the company is 'Strong Buy', as given by one analyst. We offer trading advice that aligns with the prevailing expert consensus on Alkaline Water. Our sophisticated recommendation engine employs a multidimensional algorithm to evaluate the company's growth potential, utilizing all available technical and fundamental data at the time.
Main Points
Investors may want to consider shorting Alkaline Water Company (WTER) due to its weak financial performance and high volatility. The company has a negative return on assets of 0.52, indicating that it is not generating a profit from its assets. Furthermore, it reported an operating loss of $22 million, suggesting that it is struggling to cover its operational costs. In addition, the company's stock has a high standard deviation of 6.93, indicating a high level of volatility and potential risk for investors. Given these factors, shorting WTER could be a viable strategy for investors looking to profit from the company's financial struggles and volatile stock price. What is the right price you would pay to acquire a share of Alkaline Water? For most investors, it would be the price that gives them a wide margin of safety to have minimal downside risk. In other words, most investors are always looking for undervalued stocks. Even if the future performance is not entirely as expected, the loss of holding it is minimized, and the downside risk is negated. Please read more on our stock advisor page.
Watch out for price decline
Please consider monitoring Alkaline Water on a daily basis if you are holding a position in it. Alkaline Water is trading at a penny-stock level, and the possibility of delisting is much higher compared to other delisted stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Alkaline Water stock to be traded above the $1 level to remain listed. If Alkaline Water stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.
What is happening with Alkaline Water this year
Annual and quarterly reports issued by Alkaline Water are formal financial statements that are published yearly and quarterly and sent to Alkaline stockholders. The reports show and break down the current year's ongoing operations and discuss plans for the upcoming year. Annual reports have been a requirement from the Securities and Exchange Commission (SEC) for businesses owned by the public since 1934.
Companies such as Alkaline Water often view their annual report as an effective marketing tool to disseminate their perspective on company future earnings or innovations. With this in mind, many companies devote large sums of money to making their reports attractive and informative. In such instances, the annual report becomes a forum through which a company can communicate to the general public any number of topics that may or may not be directly related to the actual data published in the reports.
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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 Rifka Kats do not own shares of Alkaline Water. Please refer to our Terms of Use for any information regarding our disclosure principles.