Marks Spencer Group classifies itself under
Consumer Cyclical sector and is part of
Department Stores industry. The entity has accumulated 1.48
B in total debt with debt to equity ratio (D/E) of 1.31, which is about average as compared to similar companies. The firm has a current ratio of 0.9, indicating that it has a negative working capital and may not be able to pay financial obligations in time and when they become due. Debt can assist Marks Spencer until it has trouble settling it off, either with new capital or with free cash flow. So, Marks Spencer's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Marks Spencer Group sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Marks to invest in growth at high rates of return. When we think about Marks Spencer's use of debt, we should always consider it together with cash and equity.
Investing in Marks Spencer, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Marks Spencer along with other instruments in the same portfolio. Using conventional
technical analysis and
fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of Marks Spencer'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 Marks Spencer. Your research has to be compared to or analyzed against Marks Spencer's peers to derive any actionable benefits. When done correctly, Marks Spencer'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 Marks Spencer Group.
How important is Marks Spencer's Liquidity
Marks Spencer
financial leverage refers to using borrowed capital as a funding source to finance Marks Spencer Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Marks Spencer 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 Marks Spencer'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 Marks Spencer'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 Marks Spencer's total debt and its cash.
Marks Spencer Correlation with Peers
Investors in Marks can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Marks Spencer Group. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Marks Spencer and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Marks is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with
your current brokerage. Please check
volatility of Marks for more details
Another Deeper Perspective
Marks Spencer appears to be slightly risky, given 3 months investment horizon.
Marks Spencer Group has Sharpe Ratio of 0.28, which conveys that the firm had 0.28% of return per unit of risk over the last 3 months. Our standpoint towards estimating the volatility of a stock is to use all available market data together with stock-specific
technical indicators that cannot be
diversified away. By analyzing
Marks Spencer Group technical indicators you can presently evaluate if the expected return of 0.8% is justified by implied risk. Please exercise Marks Spencer's Downside Deviation of 2.57,
risk adjusted performance of 0.2969, and Mean Deviation of 2.22 to check out if our risk estimates are consistent with your expectations.
Momentum Analysis of Marks Spencer suggests possible reversal in February
The standard deviation is down to 2.98 as of today.
As of the 11th of January 2023, Marks Spencer secures the Downside Deviation of 2.57,
risk adjusted performance of 0.2969, and Mean Deviation of 2.22. In connection with
fundamental indicators, the
technical analysis model lets you check existing technical drivers of Marks Spencer Group, as well as the relationship between them. Strictly speaking, you can use this information to find out if the firm will indeed mirror its model of past prices, or the prices will eventually revert. We are able to interpolate and collect nineteen
technical drivers for Marks Spencer, which can be compared to its peers in the industry. Please verify
Marks Spencer Group variance and
potential upside to decide if Marks Spencer Group is priced some-what accurately, providing market reflects its recent price of 3.52 per share. Given that Marks Spencer Group has
jensen alpha of 0.7481, we recommend you to check Marks Spencer's last-minute market performance to make sure the company can sustain itself at a future point.
Our Conclusion on Marks Spencer
While some firms under the department stores industry are still a bit expensive, Marks Spencer may offer a potential longer-term growth to investors. With a relatively neutral outlook on the current economy, it is better to hold off any trading of Marks as the current risk-reward utility is not appealing enough. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Marks Spencer.
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Rifka Kats is a Member of Macroaxis Editorial Board. Rifka writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce.
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 Rifka Kats do not own shares of Marks Spencer Group. Please refer to our
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