Liabilities Breakdown
Current Liabilities
144.7 M
Long-Term Liabilities
| Total Liabilities | 169.83 Million | |
| Current Liabilities | 18.68 Million | |
| Long-Term Liabilities | 144.73 Million |
Should I hold on to my Local (USA Stocks:LOCL) position?
 | By Gabriel Shpitalnik | Macroaxis Story |
Local Bounti Corp currently has liabilities amounting to 120.08 million, with a Debt to Equity (D/E) ratio of 1.07. This ratio is approximately average when compared to similar companies. The company's current ratio stands at 2.2, indicating that it has sufficient liquidity to meet its financial obligations as they come due.
Debt can be beneficial for Local Bounti Corp until it encounters difficulties in paying it off, either through raising new capital or generating free cash flow. If the company fails to meet its legal obligations to repay its debt, shareholders could potentially lose their entire investment. However, a more common scenario is for companies like Local Bounti Corp to issue additional shares at discounted prices, which dilutes the value of existing shares.
In this context, debt can be an excellent tool for Local Bounti Corp to invest in growth at high rates of return. When evaluating Local Bounti Corp's use of debt, it is important to consider it in conjunction with the company's cash and equity positions.
Rigorous look
Investing in Local Bounti Corp stock presents a high-risk, high-reward scenario. The company's total risk alpha of -0.7 and a standard deviation of 6.66 indicate a high level of risk. However, the potential upside of 14.07 suggests significant growth potential. The company's financial health is a concern, with a net income from continuing operations showing a loss of 111.1M and an operating income showing a loss of 94.5M. Despite these losses, the company has managed to maintain a net working capital of 10.8M, which could provide some financial stability. Investors should carefully consider these factors before deciding to leverage their investment in Local Bounti Corp stock.Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.
Reviewed by Raphi Shpitalnik
As we approach September, the financial outlook for Local Bounti Corp, a prominent player in the Farm Products industry, remains a topic of interest among investors. Despite the company's substantial total assets of 278.7M, it has been grappling with significant losses, with a net income from continuing operations reported at a loss of 111.1M. The company's EBITDA stands at a loss of 94.3M, reflecting the high total operating expenses of 96.7M. The firm's total stockholder equity is 121.3M, bolstered by other stockholder equity of 300.6M. However, the company's cash flow situation presents a challenge, with a change in cash showing a decrease of 76.1M, bringing the begin period cash flow to 101.1M. Despite these financial hurdles, the analyst overall consensus for Local Bounti Corp stock remains a 'Strong Buy' on the NYSE exchange. The forthcoming quarterly report for Local Bounti Corp is anticipated to be released on August 9, 2023. The stock is currently experiencing above-average trading activity. The stability of Local Bounti's Issuance Repayment of Debt Securities is noteworthy, especially in comparison to the previous year. The company's current value of Issuance Repayment of Debt Securities is estimated to be approximately 131.96 million. Share-Based Compensation is projected to increase to around 42.3 million this year, although it is likely that the value of Earnings Before Tax will decrease to (114 million). As many millennials are steering clear of the food products sector, it seems prudent to delve deeper into Local Bounti Corp to understand its current market trends. We will examine whether the company can maintain a manageable level of debt while minimizing operating losses.Local Bounti financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Local Bounti, including all of Local Bounti's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Local Bounti assets, the company is considered highly leveraged. Understanding the composition and structure of overall Local Bounti debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.
Understanding Local Total Liabilities
Local Bounti Corp liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Local Bounti Corp has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Local Bounti balance sheet include debt obligations and money owed to different Local Bounti vendors, workers, and loan providers. Below is the chart of Local short long-term liabilities accounts currently reported on its balance sheet. You can use Local Bounti Corp financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Local Bounti's Liquidity
Local Bounti financial leverage refers to using borrowed capital as a funding source to finance Local Bounti Corp ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Local Bounti 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 Local Bounti'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 Local Bounti'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 Local Bounti's total debt and its cash.
Is Local Bounti valued adequately by the market?
The entity reported the previous year's revenue of 19.47 M. Net Loss for the year was (111.07 M) with profit before overhead, payroll, taxes, and interest of 3.99 M.
Local Bounti Corp, a food products company listed on the NYSE, is expected to face significant financial challenges in September. The company has a high probability of bankruptcy at 96.00%, a troubling sign for potential investors. The firm's net income reflects a substantial loss of $111.1M, further emphasizing the financial difficulties it is currently facing. Local Bounti Corp's financial health is also indicated by its negative EBIT of $94.5M and a net debt of $106.4M. The company's current ratio stands at 2.24X, suggesting it can cover its short-term liabilities.However, its total liabilities amount to $157.4M, which is significantly higher than its total current assets of $34.1M. The company's stock exhibits a beta of 1.25, indicating a higher volatility compared to the market. The price to sales ratio is at a high 15.77X, suggesting the stock might be overvalued. The company's shares are majorly owned by insiders at 53.16%, with institutions holding 21.37% of the stock. Despite the challenging financial outlook, the company managed to generate revenue of $19.47M, with a cost of revenue at $17.3M. However, the company's cash flow situation is concerning, with a change in cash of -$76.1M, leaving an end period cash flow of $24.9M. In conclusion, Local Bounti Corp's financial outlook for September appears precarious, and potential investors should exercise caution. .
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