SmileDirectClub Inc(SDS:NSD) Stephens & Co lowers the target price to $2

STA Research
by: STA Research
SmileDirectClub Inc

Stephens & Co maintain SmileDirectClub Inc with an Equal-Weight rating and lowers the target price to $2 from $3 on the company’s stock.

Based on the SmileDirectClub Inc stock forecasts from 4 analysts, the average analyst target price for SmileDirectClub Inc is USD 1.40 over the next 12 months. SmileDirectClub Inc’s average analyst rating is Hold . Stock Target Advisor’s own stock analysis of SmileDirectClub Inc is Bearish, which is based on 2 positive signals and 8 negative signals. At the last closing, SmileDirectClub Inc’s stock price was USD 1.30SmileDirectClub Inc’s stock price has changed by -0.76% over the past week, +23.81% over the past month and -74.41% over the last year.

What we like:

Underpriced compared to book value

The stock is trading low compared to its peers on a price to book value basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.

High Gross Profit to Asset Ratio

This stock is in the top quartile compared to its peers on Gross Profit to Asset Ratio. This is a popular measure among value investors for showing superior returns in the long run.

What we don’t like:

Low market capitalization

This is among the smaller entities in its sectors with below median market capitalization. That may make it less stable in the long run unless it has a unique technology or market which can help it grow or get acquired in future.

Poor risk adjusted returns

This company is delivering below median risk adjusted returns in its peers. Even if it is outperforming on returns , the returns are unpredictable. Proceed with caution.

High volatility

The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.

Below median dividend returns

The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Negative cashflow

The company had negative total cash flow in the most recent four quarters.

Negative free cash flow

The company had negative total free cash flow in the most recent four quarters.

Low Dividend Growth

This stock has shown below median dividend growth in the previous 5 years compared to its sector.

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