TSXV:POC Income Statement Jan 2nd 18
Is POC’s cost structure indicative of a high beta?
An asset-heavy company tends to have a higher beta because the risk associated with running fixed assets during a downturn is highly expensive. I test POC’s ratio of fixed assets to total assets in order to determine how high the risk is associated with this type of constraint. Given a fixed to total assets ratio of over 30%, POC seems to be a company which invests a big chunk of its capital on assets that cannot be scaled down on short-notice. As a result, this aspect of POC indicates a higher beta than a similar size company with a lower portion of fixed assets on their balance sheet. This outcome contradicts POC’s current beta value which indicates a below-average volatility.
What this means for you:
Are you a shareholder? POC may be a worthwhile stock to hold onto in order to cushion the impact of a downturn. Depending on the composition of your portfolio, low-beta stocks such as POC is valuable to lower your risk of market exposure, in particular, during times of economic decline. For next steps, take a look at POC’s outlook to see what analysts are expecting for the stock on our free analysis plaform here.
Are you a potential investor? Depending on the composition of your portfolio, POC may be a valuable addition to cushion the impact of a downturn. Potential investors should look into its fundamental factors such as its current valuation and financial health. Take into account your portfolio sensitivity to the market before you invest in POC, as well as where we are in the current economic cycle. Continue your research on the stock with our free fundamental research report for POC here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.