Macroaxis Stories

Are investors happy with Stitch Fix (USA Stocks:SFIX) forward indicators?

September 23, 2024  By Raphi Shpitalnik
Macroaxis Story
Currently, we view Stitch Fix stock as a risky investment. The company has an Efficiency Ratio (or Sharpe Ratio) of 0.0107, meaning it earned just 0.0107% for every unit of risk taken over the past three months. We’ve identified twenty-eight technical indicators that can help assess the company’s volatility. It’s worth checking Stitch Fix’s Semi Deviation of 4.19, a coefficient of variation of 3571.08, and a Risk Adjusted Performance of 0.0309. These metrics will help you determine if our risk assessment aligns with the expected return of 0.0487%.

Top Findings

Stitch Fix's recent stock dip of over 3% may present a compelling buying opportunity for investors, especially considering its current ratio of 1.62X, which indicates solid liquidity. Despite reporting a loss of 1.06 per share and retained earnings of -338.4M, the company boasts a market capitalization of 482.02M and a price-to-sales ratio of just 0.34X, suggesting that the stock could be undervalued in the apparel retail sector.
Published over two months ago
View all stories for Stitch Fix | View All Stories

Reviewed by Ellen Johnson

When it rains, it pours, and right now, Stitch Fix is feeling the downpour. With a market capitalization of $482 million, the company recently reported a staggering net income loss of 172 million. This dip of over 3% could spark interest for investors looking for a bargain, especially considering its book value per share sits at 1.71. However, the fundamentals paint a challenging picture; the company carries a significant probability of bankruptcy at nearly 45%, and its return on assets stands at a troubling -0.15. On the bright side, Stitch Fix boasts 212.98 million in cash and equivalents, providing some cushion against its operational hurdles. With shares outstanding at 99.5 million, and analysts predicting a possible upside to 8.39, some may wonder if this downturn presents a golden opportunity or a red flag. Stitch Fix's accounts receivable have remained stable over the past year. Total stockholder equity is expected to increase to around $321.6 million in 2024, while stock purchases may decline by $14.7 million. The company is set to announce its earnings tomorrow. Despite concerns in the specialty retail sector, it's important to analyze Stitch Fix based on its current fundamentals. Recent investor anxiety stems from market uncertainty, but the likelihood of bankruptcy for Stitch Fix is under 42%. The big question now is whether investors will continue to buy into the company this October.
Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Stitch Fix income statement, its balance sheet, and the statement of cash flows. Potential Stitch Fix investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Stitch Fix investors may use each financial statement separately, they are all related. The changes in Stitch Fix's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Stitch Fix's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Stitch Fix fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Stitch Fix performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Stitch Fix shares is the value that is considered the true value of the share. If the intrinsic value of Stitch is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Stitch Fix. Please read more on our fundamental analysis page.

How effective is Stitch Fix in utilizing its assets?

Stitch Fix reports assets on its Balance Sheet. It represents the amount of Stitch resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Stitch Fix aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Specialty Retail space. To get a better handle on how balance sheet or income statements item affect Stitch volatility, please check the breakdown of all its fundamentals.

Are Stitch Fix Earnings Expected to grow?

The future earnings power of Stitch Fix involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Stitch Fix factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Stitch Fix stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Stitch expected earnings.

Stitch Fix Gross Profit

Stitch Fix Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Stitch Fix previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Stitch Fix Gross Profit growth over the last 10 years. Please check Stitch Fix's gross profit and other fundamental indicators for more details.

Breaking down the case for Stitch Fix

Institutional investors typically avoid acquiring a high percentage of Stitch Fix stocks because performing such an act may violate securities laws. They are usually not investing their own money, but rather making investments on behalf of their clients. Let's take a look at how the ownership of Stitch is distributed among investors.

Ownership Allocation

Stitch Fix shows a total of 99.49 Million outstanding shares. The majority of Stitch Fix outstanding shares are owned by institutional holders. These institutional investors are usually referred to as non-private investors looking to take positions in Stitch Fix to benefit from reduced commissions. Consequently, institutions are subject to a different set of regulations than regular investors in Stitch Fix. Please pay attention to any change in the institutional holdings of Stitch Fix as this could imply that something significant has changed or is about to change at the company. Please note that no matter how many assets the company owns, if the real value of the company is less than the current market value, you may not be able to make money on it.
Retail Investors
6.25%		Insiders
5.63%		Institutions
88.12%
Retail Investors6.25
Insiders5.63
Institutions88.12
Please be aware that individual investors typically purchase shares for their personal accounts and usually in smaller quantities compared to institutional investors. While they might influence Stitch Fix's decisions if they own a significant combined portion of its shares, such influence is relatively rare. Conversely, institutional investors - like mutual funds, pension funds, hedge funds, and other investment companies - often have a substantial sway over Stitch Fix's decisions due to their larger holdings.

Asset Utilization

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Stitch Fix has an asset utilization ratio of 266.64 percent. This suggests that the Company is making $2.67 for each dollar of assets. An increasing asset utilization means that Stitch Fix is more efficient with each dollar of assets it utilizes for everyday operations.
Net Tangible Assets
310 M
Total Current Assets
431.2 M
Net Tangible Assets310.02 Million31.74
Non Current Assets Total189.44 Million19.39
Non Currrent Assets Other3.45 Million0.35
Other Assets2.7 Million0.28
Other Current Assets40 Million4.09
Total Current Assets431.24 Million44.15
Intangible Assets0.00.0
In the world of investing, timing can be everything. Stitch Fix recently saw its stock dip over 3%, raising questions about whether this presents a buying opportunity. The company reported a staggering loss of 172 million in net income, alongside total operating expenses of 869.3 million, which highlights ongoing challenges in profitability. However, with cash and short-term investments totaling 257.6 million, the company maintains a solid liquidity position. Investors should weigh these factors carefully, as the apparel retail industry continues to evolve and adapt to changing consumer preferences.

Will Stitch Fix current slide continue?

Stitch Fix's stock is currently in a tough spot, with its risk alpha indicator at -0.52, hinting that it may be lagging behind expected returns. This raises the question: will the stock continue to slide, or is a rebound on the way? Investors should pay close attention to upcoming earnings reports and market trends, as any positive developments could lead to a significant price jump, presenting an intriguing opportunity amid the uncertainty. The stock shows above-average volatility, which can help investors gauge risk during both rising and falling markets. In bear markets, increased volatility can weigh heavily on Stitch Fix's stock price, causing stress for shareholders.
This often prompts investors to adjust their portfolios, seeking other options as prices decline.Stitch Fix's recent dip of over 3 percent presents a compelling opportunity for investors to consider. With a current market value of 3.79, the stock is trading close to its valuation real value of 3.46, suggesting it may be undervalued. Analysts generally hold a cautious stance, with a consensus rating of "Hold" and a highest estimated target price of 4. However, the potential upside could reach as high as 8.39, making it an intriguing option for those willing to navigate the current market volatility. As the fiscal year ends in July, keeping an eye on upcoming earnings reports could provide further insights into the company's trajectory..

Building efficient market-beating portfolios requires time, education, and a lot of computing power!

The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.

Try AI Portfolio Architect

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 Stitch Fix. 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