This module uses fundamental data of Ambarella to approximate the value of its Beneish M Score. Ambarella M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out Ambarella Piotroski F Score and Ambarella Altman Z Score analysis.
At present, Ambarella's Short Term Debt is projected to increase significantly based on the last few years of reporting. The current year's Short and Long Term Debt Total is expected to grow to about 7.4 M, whereas Net Debt is forecasted to decline to (146.6 M). At present, Ambarella's PTB Ratio is projected to increase slightly based on the last few years of reporting. The current year's Days Sales Outstanding is expected to grow to 49.48, whereas Price To Sales Ratio is forecasted to decline to 5.26.
At this time, it appears that Ambarella is an unlikely manipulator. The earnings manipulation may begin if Ambarella's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Ambarella executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Ambarella's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Ambarella's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Ambarella's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Ambarella in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Ambarella's degree of accounting gimmicks and manipulations.
M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.
Depreciation And Amortization
26.05 Million
At present, Ambarella's Depreciation And Amortization is projected to increase significantly based on the last few years of reporting.
Ambarella Earnings Manipulation Drivers
Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Ambarella. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Ambarella's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Ambarella's managers, analysts, and investors.
Environmental
Governance
Social
About Ambarella Fundamental Analysis
The Macroaxis Fundamental Analysis modules help investors analyze Ambarella's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Ambarella using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Ambarella based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.
When determining whether Ambarella offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Ambarella's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Ambarella Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Ambarella Stock:
For information on how to trade Ambarella Stock refer to our How to Trade Ambarella Stock guide.You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Is Semiconductors & Semiconductor Equipment space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Ambarella. If investors know Ambarella will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Ambarella listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Earnings Share
(3.87)
Revenue Per Share
5.431
Quarterly Revenue Growth
0.026
Return On Assets
(0.15)
Return On Equity
(0.30)
The market value of Ambarella is measured differently than its book value, which is the value of Ambarella that is recorded on the company's balance sheet. Investors also form their own opinion of Ambarella's value that differs from its market value or its book value, called intrinsic value, which is Ambarella's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Ambarella's market value can be influenced by many factors that don't directly affect Ambarella's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Ambarella's value and its price as these two are different measures arrived at by different means. Investors typically determine if Ambarella is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ambarella's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.