Are W R private investors ready to double down?
 | By Rifka Kats | Macroaxis Story |
Considering the 60-day investment horizon W R is expected to generate 2.62 times more return on investment than the market. However, the company is 2.62 times more volatile than its market benchmark. It trades about 0.11 of its potential returns per unit of risk. The DOW is currently generating roughly 0.14 per unit of risk. As many investors are getting excited about basic materials space, it is fair to go over W R Grace. We will analyze if the expected returns on W R will justify its current volatility. W R's low volatility may still impact the value of the stock as we estimate it as currently overvalued. The real value, based on our analysis, is getting close to 56.84 per share.
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Reviewed by Ellen Johnson
W R Grace has roughly 268.7 M in cash with 382.8 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 4.06.
How important is W R's Liquidity
W R financial leverage refers to using borrowed capital as a funding source to finance W R Grace ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. W R 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 W R'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 W R'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 W R's total debt and its cash.
A Deeper Perspective
The current bullish price patterns experienced by current W R Grace shareholders may raise some interest from investors. The stock closed today at a share price of 61.27 on 246,401 in trading volume. The company management teams have been very successful in rebalancing the entity assets at opportune times to take advantage of market volatility in January. The stock standard deviation of daily returns for 30 days investing horizon is currently 2.08. The current volatility is consistent with the ongoing market swings in January 2021 as well as with W R Grace unsystematic, company-specific events.
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