The current price rise of Superior Drilling created some momentum for stockholders as it was traded today as low as 0.95 and as high as 1.0 per share. The company directors and management may have good odds in positioning the company resources to exploit market volatility in June. The stock standard deviation of daily returns for 90 days investing horizon is currently 7.06. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Superior Drilling partners.
Does Superior Drilling (AMEX:SDPI) has enough cash to last in June?
By Raphi Shpitalnik | Macroaxis Story |
Superior Drilling is scheduled to announce its earnings today. As many passive investors are finally getting excited about energy space, Superior Drilling Products could be a good starting point. Here we also measure the ability of Superior Drilling to meet its long-term debt obligations, such as interest payments on debt, the final principal payment on the debt, and any other fixed obligations like lease payments.
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Reviewed by Vlad Skutelnik
This firm currently holds 6.78 M in liabilities with Debt to Equity (D/E) ratio of 1.89, which is about average as compared to similar companies. The company has a current ratio of 1.31, which is within standard range for the sector. Debt can assist Superior Drilling until it has trouble settling it off, either with new capital or with free cash flow. So, Superior Drilling'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 Superior Drilling sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Superior to invest in growth at high rates of return. When we think about Superior Drilling's use of debt, we should always consider it together with cash and equity.Superior Drilling financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Superior Drilling, including all of Superior Drilling'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 Superior Drilling assets, the company is considered highly leveraged. Understanding the composition and structure of overall Superior Drilling 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.
Watch out for price decline
Please consider monitoring Superior Drilling on a daily basis if you are holding a position in it. Superior Drilling is trading at a penny-stock level, and the possibility of delisting is much higher compared to other delisted stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Superior Drilling stock to be traded above the $1 level to remain listed. If Superior Drilling stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.
How important is Superior Drilling's Liquidity
Superior Drilling financial leverage refers to using borrowed capital as a funding source to finance Superior Drilling Products ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Superior Drilling 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 Superior Drilling'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 Superior Drilling'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 Superior Drilling's total debt and its cash.
Going after Superior Financials
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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 Raphi Shpitalnik do not own shares of Superior Drilling Products. Please refer to our Terms of Use for any information regarding our disclosure principles.