Buy low, sell high. This is the mantra that often guides the decisions of savvy investors. In the case of Smart Global Holdings (SGH), a player in the technology and semiconductors industry, the shifting
may present an opportunity to capitalize. With a trailing PE of 126.2, the stock seems overvalued, but a closer look at the
reveals a different story. The company has a robust end period cash flow of $410.1M and cash reserves of $365.6M. Despite a change in working capital resulting in a loss of $55.2M, the company's gross profit stands at a healthy $415.2M. The company's return on assets is 3.82%, indicating efficient use of its total assets valued at $1.51B. However, the company carries a long-term debt of $754.8M, which is a concern. The probability of bankruptcy stands at 39.26%, which is relatively high. Despite this, institutions seem to have faith in the company, with 96.97% of shares owned by them. The analyst's highest estimated target price is $35, indicating a possible upside. It's time to keep a close eye on SGH's shifting fundamentals. Smart Global Holdings is set to announce its earnings today, with the forthcoming quarterly report anticipated on January 9, 2024. As some of us show enthusiasm for the semiconductors and semiconductor equipment sector, it's worthwhile to scrutinize Smart Global Holdings more closely to better assess its fundamental indicators. We will delve into why we maintain our confidence in anticipation of a recovery. The probability of financial turmoil for Smart Global Holdings is less than 2 percent. Will the company's traders continue to see an uptick in February?
Institutional investors typically avoid acquiring a high percentage of Smart Global stocks because performing such an act may violate securities laws. They are usually not investing their own money, but rather making investments on behalf of their clients. Let's take a look at how the ownership of Smart is distributed among investors.
Ownership Allocation
Smart Global maintains a total of 51.84 Million outstanding shares. The majority of Smart Global Holdings
outstanding shares are owned by
institutional holders. These institutional investors are usually referred to as non-private investors looking to take positions in Smart Global to benefit from reduced commissions. Consequently, institutions are subject to a different set of regulations than regular investors in Smart Global Holdings. Please pay attention to any change in the institutional holdings of Smart Global Holdings as this could imply that something significant has changed or about to change at the company. 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 Investors | 0.0 |
| Insiders | 3.03 |
| Institutions | 96.97 |
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 Smart Global's 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 Smart Global's decisions due to their larger holdings.
Asset Utilization
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Smart Global has an asset utilization ratio of 95.7 percent. This signifies that the company is making $0.96 for each dollar of assets. An increasing asset utilization means that Smart Global Holdings is more efficient with each dollar of assets it utilizes for everyday operations.
| Current Assets752.3 M | Assets Non Current394.4 M | | |
| Current Assets | 752.34 Million | 53.92 |
| Assets Non Current | 394.35 Million | 28.26 |
| Goodwill | 207.26 Million | 14.85 |
| Tax Assets | 41.4 Million | 2.97 |
As Warren Buffet wisely noted, "Price is what you pay. Value is what you get." This is particularly relevant when examining the shifting
fundamentals of Smart Global Holdings (NASDAQ: SGH). Despite a challenging semiconductor industry environment, SGH's
fundamentals reveal a compelling story. The company's PEG ratio stands at a remarkably low 0.09, suggesting that the stock may be undervalued given its earnings growth rate. This is further supported by a Price to Earnings ratio of 25.86X and Price to Book value of 4.411. However, the company's
financial health warrants caution, with net borrowings at $259.5M and long-term debt at $754.8M. Despite these liabilities, the company maintains a healthy working capital of $481.15M and free cash flow of $24.3M. As such, while SGH presents certain financial risks, its undervaluation and strong cash position may offer a unique opportunity for investors seeking to capitalize on the company's shifting fundamentals.
Our Smart analysis signifies possible reversion in February
The recent total risk alpha for Smart Global Holdings, a metric that measures the disparity between a portfolio's actual returns and its expected performance considering its level of systematic risk, is at -1.69. This negative figure suggests that the stock has underperformed the market, implying a potential undervaluation. Consequently, we anticipate a possible reversion to the mean in February. Investors should monitor this stock closely as it could offer a profitable opportunity for those seeking to capitalize on this potential price adjustment. Smart Global Holdings is exhibiting above-average volatility over the chosen time period. Investors should thoroughly examine Smart Global Holdings to ensure that their intended
market timing strategies align with their expectations regarding Smart Global's volatility. Comprehending various
market volatility trends can often assist investors in timing the market. Utilizing volatility indicators correctly allows traders to gauge Smart Global's stock risk against market volatility during both bullish and bearish trends. The heightened level of volatility that accompanies bear markets can directly affect
Smart Global's stock price, causing stress for investors as they watch the value of their shares decrease.
This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. In conclusion, the recent price plunge of Smart Global Holdings stock may seem perplexing, but a closer look at the data reveals potential opportunities for investors. The stock's current market valuation stands at
$18.93, which is below its real value of
$22.5. This discrepancy suggests that the stock is undervalued and could present a buying opportunity. Furthermore, the analyst overall consensus is a 'Buy' with 1 'Buy' and 5 'Strong Buys'. The analyst target price estimated value is $26.166, with a possible upside price of $25.71 and a highest estimated target price of $35. This indicates a significant potential for growth. However, investors should also consider the possible downside price of $13.24. As always, it's crucial to conduct thorough research and consider various factors before making investment decisions. .
Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in 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 Ellen Johnson do not own shares of SGH Old. Please refer to our
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