Cash is king in the world of finance, and Innovative Solutions (ISSC) seems to be ruling the roost with a significant increase in its end period cash flow, which surged from $8.3M to $17.3M. This aerospace and defense industry player, listed on NASDAQ, also reported a healthy EBITDA of $7.58M. However, the stability of ISSC's
fundamentals in January will be tested by factors such as its total operating expenses of $9.5M and a tax provision of $1.8M. With a beta of 0.95, the stock shows less volatility compared to the market, which could be a sign of stability for potential investors. Currently, Innovative Solutions' Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is projected to see a significant increase, based on the company's financial reports from the past few years. The Earnings Before Tax (EBT) for the current year is expected to grow to approximately $9.1 million, while the Enterprise Value (EV) is forecasted to decline to about $122.8 million.
There have been numerous instances where share prices have plummeted following a sudden change in one of the fundamental indicators. Let's delve into some of Innovative Solutions' key ratios to evaluate whether its shares are reasonably priced as we enter January.
At present, we estimate Innovative Solutions to be undervalued. The real value is nearing $9.67 per share.
Typically, a company's
financial statements are the reports that show the
financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Innovative Solutions income statement, its balance sheet, and the statement of cash flows. Potential Innovative Solutions investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Innovative Solutions investors may use each financial statement separately, they are all related. The changes in Innovative Solutions's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Innovative Solutions's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our
technical analysis and
fundamental analysis pages.
The goal of Innovative Solutions
fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Innovative Solutions performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Innovative Solutions shares is the value that is considered the true value of the share. If
the intrinsic value of Innovative is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Innovative Solutions. Please read more on our
fundamental analysis page.
How important is Innovative Solutions's Liquidity
Innovative Solutions
financial leverage refers to using borrowed capital as a funding source to finance Innovative Solutions and ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Innovative Solutions 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 Innovative Solutions' 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 Innovative Solutions' 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 Innovative Solutions's total debt and its cash.
Another Deeper Perspective
Although in the United States, the Securities and Exchange Commission has enforced strong rules to prevent insiders from engaging in insider trading, finding insiders among active shareholders of Innovative Solutions is not uncomon. There are few distinct groups of Innovative Solutions stakehholders that the SEC considers insiders. Investors usually gain information through their work as corporate directors, officers, or employees. If these individuals share the information with a friend, family, or business partner and the person who receives the information exchanges stock in the company, he or shie is also an insider. Let's take a look at how the ownership of Innovative is distributed among investors.
Ownership Allocation
Innovative Solutions secures a total of 17.45 Million outstanding shares. Innovative Solutions secures significant amount of outstanding shares owned by
insiders. An
insider is usually defined as a CEO, other corporate executive, director, or
institutional investor who own at least 10% of the company's outstanding shares. Since such a large part of the company is owned by insiders, it is advisable to analyze if each of these insiders have been buying or selling the stock in recent months. Note that regardless of who owns the company, if the true value of the entity is less than the market is willing to pay for it, you may not be able to generate positive returns over time.
| Retail Investors40.47% | Insiders31.9% | Institutions27.63% |
| Retail Investors | 40.47 |
| Insiders | 31.9 |
| Institutions | 27.63 |
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence Innovative Solutions' decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over Innovative Solutions' decisions due to their larger holdings.
| 2020 | 2021 | 2022 | 2023 (projected) |
Revenues USD | 23.0M | 27.7M | 25.0M | 23.4M | Revenues | 23.0M | 27.7M | 25.0M | 23.4M |
Asset Utilization
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Innovative Solutions has an asset utilization ratio of 79.93 percent. This indicates that the company is making $0.8 for each dollar of assets. An increasing asset utilization means that Innovative Solutions And is more efficient with each dollar of assets it utilizes for everyday operations.
| Current Assets26 M | Assets Non Current8.5 M | | |
| Current Assets | 26.01 Million | 75.09 |
| Assets Non Current | 8.53 Million | 24.63 |
| Goodwill | 53,995.58 | 0.16 |
| Tax Assets | 42,939.31 | 0.12 |
In the world of investing, cash is king. Innovative Solutions (ISSC) seems to be adhering to this principle with a healthy cash flow from operations of $6.09M and a significant change in cash of $9M. The company's robust current ratio of 8.97X further underscores its financial stability, indicating that it has more than enough resources to cover its short-term obligations. The Aerospace & Defense industry player also boasts a net income of $5.52M, which is a positive sign for potential investors. However, investors should also consider the company's high probability of bankruptcy at 49.05%, which might be a cause for concern. In terms of ownership, the shares are significantly held by insiders and institutions, standing at 31.90% and 27.63% respectively, which could suggest confidence in the company's prospects. As we move into January, these
fundamental indicators suggest that Innovative Solutions may offer stability, but as always, investors should do their due diligence.
Innovative showing appearance of lower volatility
Innovative Solutions and Support Inc. (IS&S) recently reported a drop in skewness level to -0.17, which could potentially signal an impending price decrease. However, this shift also indicates a decrease in the stock's volatility, which could be appealing to conservative investors. The lower skewness suggests that the stock's returns are becoming more normally distributed, reducing the possibility of extreme price fluctuations. While investors should prepare for potential short-term price declines, the reduced volatility could make Innovative Solutions a more stable long-term investment. Innovative Solutions and Support exhibits very low volatility with a skewness of -0.17 and a kurtosis of 2.75. However, we recommend investors to further study the technical indicators of Innovative Solutions and Support to ensure all market information is available and reliable. Understanding different
market volatility trends can often help investors to time the market. Using volatility indicators correctly allows traders to measure the risk of Innovative Solutions' stock against market volatility during both bullish and bearish trends. The increased level of volatility that accompanies bear markets can directly impact
Innovative Solutions' stock price, adding stress to investors as they watch the value of their shares plummet. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop.
Our Final Perspective on Innovative Solutions
When is the right time to buy or sell Innovative Solutions And? Buying stocks such as Innovative Solutions isn't very hard. However, what challenging for most investors is doing it at the right time. Proper
market timing is something most people cannot do without
sophisticated tools, which help to isolate the right opportunities, deliver winning trades and diversify portfolios on a daily basis.
Taking everything into account, as of the 19th of December 2023, we believe that at this point, Innovative Solutions is not too volatile with
very small odds of financial turmoil within the next 2 years. From a slightly different point of view, the entity appears to be
undervalued. Our final 90 days buy-hold-sell advice on the firm is
Hold.
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Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management.
View Profile 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 Vlad Skutelnik do not own shares of Innovative Solutions and. Please refer to our
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