Macroaxis Stories

Should I exit my Ashford position?

July 19, 2020  By Raphi Shpitalnik
Macroaxis Story
The upcoming quarterly report is expected on the 6th of August 2020. The stock is currently undergoing an active upward rally. Ashford Hospitality Operating Margin is comparatively stable at the moment as compared to the past year. Ashford Hospitality reported Operating Margin of 5.90 in 2019. Cash and Equivalents Turnover is likely to grow to 5.23 in 2020, whereas Earnings Before Interest Taxes and Depreciation Amortization EBITDA are likely to drop slightly above 403.8 M in 2020. As many millenniums are excited about real estate space, it is only fair to review Ashford Hospitality Trust, and how it stands out. I will address a few possible reasons this stock is not currently respected by private investors.
Published over a year ago
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Reviewed by Rifka Kats

Ashford Hospitality has 4.15 B in debt. The entity has 4.15 B in debt. The firm has a current ratio of 2.92, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Ashford Hospitality has an asset utilization ratio of 28.6 percent. This implies that the company is making $0.29 for each dollar of assets. An increasing asset utilization means that Ashford Hospitality Trust is more efficient with each dollar of assets it utilizes for everyday operations.
Ashford Hospitality financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Ashford Hospitality, including all of Ashford Hospitality'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 Ashford Hospitality assets, the company is considered highly leveraged. Understanding the composition and structure of overall Ashford Hospitality 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.

How important is Ashford Hospitality's Liquidity

Ashford Hospitality financial leverage refers to using borrowed capital as a funding source to finance Ashford Hospitality Trust ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Ashford Hospitality 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 Ashford Hospitality'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 Ashford Hospitality'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 Ashford Hospitality's total debt and its cash.

How is Ashford allocating its cash?

To perform a cash flow analysis of Ashford Hospitality, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Ashford Hospitality is receiving and how much cash it distributes out in a given period. The Ashford Hospitality cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

What is the case for Ashford Hospitality Investors

Ashford Hospitality reported the last year revenue of 1.42 B. Reported Net Loss for the year was (202.82 M) with profit before taxes, overhead, and interest of 410.26 M.

Asset Breakdown

Total Assets4.79 Billion
Current Assets449.02 Million
Goodwill817,974

Ashford Hospitality implied volatility may change after the gain

The coefficient of variation is down to 764.27 as of today. Ashford Hospitality Trust is showing large volatility of returns over the selected time horizon. We encourage all investors to investigate this asset further to make sure related market timing strategies are aligned with all the expectations about Ashford Hospitality implied risk.

Our Bottom Line On Ashford Hospitality

Whereas many other companies within the reit—hotel & motel industry are still a little expensive, even after the recent corrections, Ashford Hospitality may offer a potential longer-term growth to private investors. The bottom line, as of the 19th of July 2020, we believe that at this point, Ashford Hospitality is overvalued with below average probability of financial unrest within the next 2 years. Our final buy-sell recommendation on the firm is Hold.

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Editorial Staff

Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI. 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 Raphi Shpitalnik do not own shares of Ashford Hospitality Trust. Please refer to our Terms of Use for any information regarding our disclosure principles.

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