nvestors are already pushing these company’s stocks upward. That is why the industry average is as high as it is with P/E. But, around the market there are bargains to be had. AI is one of them. My thinking is that given all of the variables around this company, investors are going to want to find value and are going to use algebra to get there. AI is the underpriced company to do just that. For the stock to get to the average, which it is trading currently at $15.27, the stock would push upward another $9.00 to about $24.00. That is a substantial move.
There are currently many different techniques concerning forecasting the market as a whole as well as
predicting future values of individual securities such as C3 Ai Inc. Regardless of method or technology, to accurately forecast the stock market is more a matter of luck rather than a particular technique. Nevertheless, trying to predict the stock market accurately is still an essential part of the overall investment decision process. Using different forecasting techniques and comparing the results might improve your chances of accuracy even though unexpected events may often change the
market sentiment and impact your forecasting results.
Predictive Modules for C3 Ai
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of C3 Ai's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as C3 Ai. Your research has to be compared to or analyzed against C3 Ai's peers to derive any actionable benefits. When done correctly, C3 Ai's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in C3 Ai Inc.
How important is C3 Ai's Liquidity
C3 Ai
financial leverage refers to using borrowed capital as a funding source to finance C3 Ai Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. C3 Ai 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 C3 Ai'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 C3 Ai'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 C3 Ai's total debt and its cash.
C3 Ai Gross Profit
C3 Ai Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing C3 Ai previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show C3 Ai Gross Profit growth over the last 10 years. Please check C3 Ai's
gross profit and other
fundamental indicators for more details.
Breaking down the case for C3 Ai
Arlington Asset Investment Corp is an investment firm that has a portfolio of Mortgage Backed Securities (MBS). They have agency and private securities. They also hold real estate investments via a REIT.
MBS were the instruments that created the financial meltdown of 2008 and the subsequent Great Recession. These instruments were riddled with bad investments, false reporting and a hierarchy that even today no one really understands. And, yet, there is potential in AI.
What I am looking at is the valuation of this company relative to the industry. AI is priced 50 percent below the industry average and the sector average. Whereas the entire stock market is averaged about 25 times earnings the P/E ratio for AI is 18.11 times. Further, the industry average is about 27.75 times P/E ratio. This represents an opportunity as the market is going to start looking for bargains.
Another aspect that caught my eye is the Price/Asset ratio which in the case of AI is 3.68. However, the rest of the industry is averaging about 12. That puts this company at a discount of .3 to the rest of the industry. There is potential in the makeup of this company to move upward with its stock price and get to the industry and sector average.
Investors are already pushing these company’s stocks upward. That is why the industry average is as high as it is with P/E. But, around the market there are bargains to be had. AI is one of them. My thinking is that given all of the variables around this company, investors are going to want to find value and are going to use algebra to get there. AI is the underpriced company to do just that. For the stock to get to the average, which it is trading currently at $15.27, the stock would push upward another $9.00 to about $24.00. That is a substantial move.
At the same time, it is important to note that the EPS ratio is historically high. There is very little juice to squeeze out of the market from some of these companies. A lot of what pushed the overall market higher is the sense that investors were buying into the future earnings of companies. At the same time, investors were celebrating a republican win for president thinking that the economy would soar because of that. Well, that honeymoon may very well be over.
But, the economy is expanding continually. And, Americans are seeing their incomes increase, and subsequently, are spending more money. That translates into further growth in the economy, and lower risk for an investment firm such as AI.
At the same time, earnings over the past several years have been declining to negative, but are rebounding for the year 2016:
2012: $18.02
2013: $3.09
2014: $0.39
2015: -$3.02
With a return to positive earnings for the year 2016, the stock should push higher. In fact, there has not been much of a change in assets over the past several years. That means AI may very well see earnings as high as 2012’s $18.00 per share. Given that, if the company were to hit the same P/E ratios, that would put the stock at nearly $200.00 per share. It is currently at $15.27 per share. That would be a tremendous move in the stock price.
But, what I see mostly, discounting all the other information is the potential of the stock to reach the industry average. That in itself is the opportunity that should push the stock higher.
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David Taylor is a Senior Member of Macroaxis Editorial Board - Sector Analysis. David is a professional writer who writes for multiple investment news outlets. His primary focus is dynamic movements in financial markets and effects of economic volatility on North American industries and sectors. David has many years of experience in financial service industry including working with major banks as a FX trader. In his free time, he does a lot of outdoors type activities including rock climbing, mountain biking, hiking, mountaineering and kayaking in the summer, and snowboarding in the winter.
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