Will Loop Industries debt increase in August 2020?

This perspective, will break down some ideas for Loop Industries investors who consider a position in the firm. We will focus on the cause of why it is still reasonable for the firm to generate above-average margins and lots of cash flow. Loop Industries current daily volatility is 3.8 percent, with a beta of -0.15 and an alpha of 0.42 over DOW. We estimate Loop Industries as currently undervalued. The real value is approaching 11.67 per share. Loop Industries secures a last-minute Real Value of $11.67 per share. The latest price of the firm is $9.5. At this time, the firm appears to be undervalued. Our model forecasts the value of Loop Industries from analyzing the firm fundamentals such as return on equity of (70.60) %, current valuation of 329.42 M, and shares owned by insiders of 70.64 % as well as examining its technical indicators and Probability Of Bankruptcy. In general, we recommend obtaining undervalued stocks and abandoning overvalued stocks since, at some point, asset prices and their ongoing real values will merge together.
Published over a year ago
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Reviewed by Michael Smolkin

This firm currently holds 2.29 M in liabilities with Debt to Equity (D/E) ratio of 0.06, which may suggest the company is not taking enough advantage from borrowing. The company currently holds 2.29 M in liabilities with Debt to Equity (D/E) ratio of 0.06, which may suggest Loop Industries is not taking enough advantage from borrowing. Loop Industries has a current ratio of 15.85, suggesting that it is liquid enough and is able to pay its financial obligations when due.
Loop Industries financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Loop Industries, including all of Loop Industries'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 Loop Industries assets, the company is considered highly leveraged. Understanding the composition and structure of overall Loop Industries 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 Loop Total Liabilities

Loop Industries liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Loop Industries 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 Loop Industries balance sheet include debt obligations and money owed to different Loop Industries vendors, workers, and loan providers. Below is the chart of Loop short long-term liabilities accounts currently reported on its balance sheet.
You can use Loop Industries financial leverage analysis tool to get a better grip on understanding its financial position

How important is Loop Industries's Liquidity

Loop Industries financial leverage refers to using borrowed capital as a funding source to finance Loop Industries ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Loop Industries 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 Loop Industries' 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 Loop Industries' 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 Loop Industries's total debt and its cash.

A Deeper look at Loop

The latest price spikes of Loop Industries may encourage investors to take a closer look at the firm as it closed today at a share price of 8.87 on 65,521 in trading volume. The company management may have good odds in positioning the firm resources to exploit market volatility in August. The stock standard deviation of daily returns for 30 days investing horizon is currently 3.8. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Loop Industries partners.

Liabilities Breakdown

4.48 Million
Total Liabilities
2.82 Million
Current Liabilities
1.99 Million
Liabilities Non Curr
Loop Industries Earnings Before Interest Taxes and Depreciation Amortization EBITDA is decreasing over the last 5 years. Also, Loop Industries Average Assets is increasing over the last 5 years.

Our perspective of the recent Loop Industries roll up

Recent market risk adjusted performance is at -2.66. As of the 7th of July, Loop Industries secures the downside deviation of 3.15, mean deviation of 2.82, and risk adjusted performance of 0.2008. In connection with fundamental indicators, the technical analysis model lets you check existing technical drivers of Loop Industries, as well as the relationship between them. Strictly speaking, you can use this information to find out if the firm will indeed mirror its model of past prices, or the prices will eventually revert. We were able to analyze nineteen technical drivers for Loop Industries, which can be compared to its peers in the industry. Please verify Loop Industries standard deviation, maximum drawdown, as well as the relationship between the Maximum Drawdown and expected short fall to decide if Loop Industries is priced some-what accurately, providing market reflects its recent price of 9.5 per share. Given that Loop Industries has jensen alpha of 0.4186, we recommend you to check Loop Industries's last-minute market performance to make sure the company can sustain itself at a future point.

The Current Takeaway on Loop Industries Investment

Despite many other companies under specialty chemicals industry are still a bit expensive, Loop Industries may offer a potential longer-term growth to insiders. To sum up, as of 7th of July 2020, we believe that Loop Industries is currently undervalued with very small probability of distress in the next two years. Our overall 30 days recommendation on the firm is Cautious Hold. With a somewhat neutral outlook on your 30 days horizon, it may be better to hold off any trading activity and neither acquire new shares of Loop Industries nor sell your existing holdings in the Stock. It seems the expected volatility has not yet been fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Loop Industries.

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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 Ellen Johnson do not own shares of Loop Industries. Please refer to our Terms of Use for any information regarding our disclosure principles.

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