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Should you exit DecisionPoint Systems (USA Stocks:DPSI) after the recent volatility surge?

September 18, 2023  By Aina Ster
Macroaxis Story
The recent surge in volatility presents a potentially lucrative opportunity for investors to capitalize on DecisionPoint Systems (USA Stocks: DPSI). With a high Coefficient of Variation at 1.1K, the stock exhibits a significant level of risk, which could translate into substantial returns for risk-tolerant investors. The company's Total Risk Alpha of 0.238 further underscores this potential, indicating a higher-than-average return on risk. However, investors should also consider the stock's Downside Variance of 8.17 and Standard Deviation of 3.37, which suggest a considerable potential for price fluctuation. Despite these risks, the stock's Potential Upside of 7.25 and recent Price Change of 0.19 could make it an attractive investment in the current volatile market.

Rigorous look on DecisionPoint

DecisionPoint Systems currently holds approximately $8.46 million in cash, with a positive cash flow from operations of $12.31 million. This results in a cash-per-share (CPS) ratio of 1.16.
Published over a year ago
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Reviewed by Rifka Kats

In the midst of a recent surge in volatility, DecisionPoint Systems (USA Stocks: DPSI), a prominent player in the Technology sector, specifically in IT Services, has caught the attention of investors. The company, with a market valuation of $5.96 billion, has a real value of $6.99 billion, slightly higher than its current market value. The stock's Naive Expected Forecast Value stands at $5.42, with a possible upside price of $8.85 and a downside of $2. The single analyst covering the stock has given a 'Buy' consensus with an estimated target price of $11. With an EPS estimate of $0.54 for the next fiscal year ending in December, the company's financial health appears to be solid. However, the recent volatility in the market has left investors questioning whether now is the perfect time to capitalize on DecisionPoint Systems. Considering an investment horizon of 90 days, DecisionPoint Systems is projected to yield a return on investment that is 6.15 times greater than the market. However, it's important to note that the company is also 6.15 times more volatile than its market benchmark. It trades approximately 0.1 of its potential returns per unit of risk, while the Dow Jones Industrial Average is currently generating about 0.05 per unit of risk. While some investors may be enthusiastic about the services space, it is prudent to examine DecisionPoint Systems in more detail to better assess its risk and reward. We will explore the potential for DecisionPoint Systems' current volatility to persist through October. Despite the apparent stabilization of DecisionPoint Systems' volatility, it may still influence the stock's value. Based on our estimations, DecisionPoint Systems is currently undervalued. The true value, according to our calculations, is nearing $6.99 per share.
Volatility is a rate at which the price of DecisionPoint Systems or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of DecisionPoint Systems may increase or decrease. In other words, similar to DecisionPoint's beta indicator, it measures the risk of DecisionPoint Systems and helps estimate the fluctuations that may happen in a short period of time. So if prices of DecisionPoint Systems fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is DecisionPoint Systems's Liquidity

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

How is DecisionPoint allocating its cash?

To perform a cash flow analysis of DecisionPoint Systems, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash DecisionPoint Systems is receiving and how much cash it distributes out in a given period. The DecisionPoint Systems cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Another Deeper Perspective

The recent surge in DecisionPoint Systems short term price appreciation could raise concerns from traders as the firm is trading at a share price of 5.96 on very low momentum in volume. The company directors and management have successfully maneuvered the firm at convenient times to take advantage of all market conditions in August. The stock standard deviation of daily returns for 90 days investing horizon is currently 3.42. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from DecisionPoint Systems partners.
 2020 2021 2022 2023 (projected)
Current Assets21.14 M19.33 M32.27 M28.38 M
Total Assets39.35 M35.73 M55.56 M50 M
Current AssetsTotal Assets
DecisionPoint Systems (USA Stocks: DPSI) has recently experienced a surge in volatility, presenting a potentially lucrative opportunity for investors. The company, which operates in the Software-Application industry within the Technology sector, has a market capitalization of 45.46M and total assets valued at 55.56M. The firm's Price to Earnings ratio stands at 44.67X, while its Price to Book ratio is 4.41X, indicating a relatively high valuation compared to its book value.
The company's financial health is also reflected in its Debt to Equity ratio of 0.23%, suggesting a low level of debt relative to equity. DecisionPoint Systems' shares are primarily held by insiders, with 25.83% of shares owned by insiders, while institutions hold 5.23% of the shares. The company's profitability is evident in its Profit Margin of 0.0299% and EBITDA of 6.9M. However, the firm's volatility is reflected in its Kurtosis of 0.9875 and Maximum Drawdown of 18.7. Despite this, the company's Information Ratio of 0.0843 and Total Risk Alpha of 0.238 suggest a reasonable risk-adjusted return. In conclusion, while DecisionPoint Systems' recent volatility surge may present some risk, its strong financials and insider ownership suggest potential for significant returns. Investors should consider these factors when deciding whether now is the perfect time to capitalize on DecisionPoint Systems. .

Will DecisionPoint Systems growth be reasonable after the surge?

DecisionPoint Systems has recently witnessed a downside variance of 8.17, signaling a significant level of volatility in its stock price. This fluctuation might raise concerns for some investors, as it implies potential instability. However, it's essential to view this in the broader context of the company's growth prospects. If DecisionPoint can utilize this volatility as a catalyst for sustainable growth, the recent surge could indeed be succeeded by a period of moderate and steady expansion. Investors should closely observe the company's strategic initiatives and financial performance to make an informed decision. Currently, DecisionPoint Systems exhibits a below-average downside deviation. It has an Information Ratio of 0.08 and a Jensen Alpha of 0.3. However, we recommend investors to further scrutinize DecisionPoint Systems' expected returns to ensure all indicators align with the current outlook about its relatively low value at risk. Understanding different market volatility trends often assists investors in timing the market.
Proper utilization of volatility indicators allows traders to measure DecisionPoint Systems' stock risk against market volatility during both bullish and bearish trends. The increased level of volatility that accompanies bear markets can directly affect DecisionPoint Systems' stock price while adding stress to investors as they watch their shares' value decrease. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. Despite the recent modest market plunge, DecisionPoint Systems (DPSI) has managed to gain over 3 percent, demonstrating its resilience. The company's valuation hype value stands at 6.05, with a market value of 5.96, indicating a potential for growth. The analyst consensus points towards a 'Buy' with an estimated target price of 11, aligning with both the highest and lowest analyst estimates. This suggests a possible upside price of 8.85, significantly higher than the possible downside price of 2. With an EPS estimate of 0.54 for the next fiscal year ending in December, and a naive expected forecast value of 5.42, investing in DecisionPoint Systems could offer promising returns. .

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Editorial Staff

Aina Ster is a Member of Macroaxis Editorial Board. Aina delivers weekly perspective on ongoing market and economic trends, analysis and tips from predictive analysis to forecasting across various financial instruments. 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 Aina Ster do not own shares of DecisionPoint Systems. Please refer to our Terms of Use for any information regarding our disclosure principles.

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