Rent the Runway has an average 'Buy' rating from five analysts. This consensus may be based on technical analysis, which typically uses price momentum, patterns, and trends from historical prices to identify signals. The market sentiment towards Rent the Runway, and investors' perception of its future value, are also considered. However, the company's financials raise some concerns. It has a Profit Margin (PM) of -0.38%, suggesting it may be struggling with its pricing strategies or controlling operational costs. This is significantly below average. Additionally, it has an Operating Margin (OM) of -0.21%, indicating a net operating loss of $0.21 for every $100 of sales.
Major Takeaways
Despite Rent the Runway's negative income before tax of
113M and a disappointing EPS estimate for the current year at a loss of 32.07, there are still some technical indicators that suggest potential for investment. The company's Total Risk Alpha of 0.99 and a Sortino Ratio of 0.28, which measures the
risk-adjusted return of an investment, indicate that the stock may still offer a favorable risk-reward profile for investors willing to tolerate some volatility.
There's a saying in the world of finance: "The trend is your friend until it ends." As we head into May, Rent the Runway, a prominent player in the Apparel Retail industry, is a stock that investors may be questioning. The company, which operates in the Internet & Direct Marketing Retail service category, has seen its shares slide from a 52-week high of $64.1 to a 50-day moving average of $8.47. Despite this downward trend, the Wall Street target price remains optimistic at $23. However, with an operating loss of $80 million and a net income loss of $113.2 million, the company's
financial health is a concern. The question remains: Is there still investment potential in Rent the Runway stock this May? Despite the indifference of many baby boomers towards the internet and direct marketing retail sector, it's worth reviewing Rent the Runway in light of current market trends. We remain confident about a potential recovery. The recent price movement of Rent the Runway has contrasted sharply with the overall market trend in recent months. Uncertain fundamental indicators may suggest potential mid-term losses for private investors. The company's next financial report is due on June 5, 2024. Currently, the stock is experiencing above-average trading volumes.
Using predictive
technical analysis, we can analyze different prices and returns patterns and
diagnose historical swings to determine the real value of Rent the Runway. In general, sophisticated investors focus on analyzing Rent The stock price patterns and their correlations with different microeconomic environment and drivers. They apply predictive analytics to build Rent The's daily price indicators and compare them against related drivers such as
momentum indicators and various other types of predictive indicators. Using this methodology combined with a more conventional
technical analysis and
fundamental analysis, we attempt to find the most accurate representation of
Rent The's intrinsic value. In addition to deriving basic predictive indicators for Rent The, many experienced traders also check how macroeconomic factors affect Rent The price patterns. Please read more on our
technical analysis page or use our predictive modules below to complement your research.
Rent The
financial leverage refers to using borrowed capital as a funding source to finance Rent the Runway ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Rent The 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 Rent The'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 Rent The'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 Rent The's total debt and its cash.
Closer look at Rent The Semi Deviation
Rent the Runway has current Semi Deviation of 5.46. Semi-deviation provides a good measure of downside risk for a equity or a portfolio. It is similar to standard deviation, but it only looks at periods where the returns are less than the target or average level.
Semi-deviation is the square root of semi-variance. Semi-variance is calculated by averaging the deviations of returns that have a result that is less than the mean.
Semi Deviation | = | SQRT(SV) |
| = | 5.46 |
Let's now compare Rent The Semi Deviation to its closest peers:
| RENT | 5.4631460960083285 |
| APPN | 3.08 |
| OKTA | 1.64 |
| TTD | 1.91 |
As Warren Buffet wisely noted, be fearful when others are greedy and greedy when others are fearful.
This sentiment seems particularly relevant when considering the investment potential of Rent the Runway stock this May. Despite a 52-week high of $64.1, the stock's current typical price is $22.04, significantly below its 200-day moving average of $16.79. The company's net income shows a loss of $113.2M, and the EPS estimate for next year is a loss of $22.13. However, with a current ratio of 3.23X and a high short percent of 12.34%, there is potential for a short squeeze, which could provide an opportunity for investors willing to take on the risk. .
Rent The has a small chance to finish above $19.61 in 2 months
Rent the Runway's market risk-adjusted performance is currently at -0.24, indicating a negative return on investment given the risk. This suggests the stock is underperforming and may continue to do so. The probability of the stock price exceeding $19.61 in the next two months seems low. Investors should monitor the stock's performance closely before investing. Rent the Runway's stock exhibits above-average volatility, which can help investors time the market. However, the increased volatility during bear markets can negatively impact the stock price and cause investor stress as share values drop, often prompting portfolio rebalancing.
In conclusion, Rent the Runway's stock presents a mixed bag for investors as of the 13th of April 2024. Despite a negative EPS estimate for the current and next year at
-32.07 and
-22.13 respectively, the company's real value is estimated at 13.15, slightly below its market value of 19.23. Analysts' consensus leans towards a 'Buy' with two buys, one strong buy, and two holds. The estimated target price ranges from 5.01 to 6.11, with an average estimated value of 5.5. Given these factors, investors should carefully consider their risk tolerance and investment goals before deciding whether to invest in Rent the Runway in May. .
Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management.
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 Vlad Skutelnik do not own shares of Rent the Runway. Please refer to our
Terms of Use for any information regarding our disclosure principles.
Would you like to provide feedback on the content of this article?
You can get in touch with us directly or send us a quick note via email to
editors@macroaxis.com