I urge you to complete your research by taking a look at the following:įinancial Health: Is SPB’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. What I have not mentioned in my article here are important company-specific fundamentals such as Sedlmayr Grund und Immobilien KGaA’s financial health and performance track record. Depending on the composition of your portfolio, low-beta stocks such as SPB is valuable to lower your risk of market exposure, in particular, during times of economic decline. SPB may be a worthwhile stock to hold onto in order to cushion the impact of a downturn. This outcome contradicts SPB’s current beta value which indicates a below-average volatility. Thus, we can expect SPB to be more volatile in the face of market movements, relative to its peers of similar size but with a lower proportion of fixed assets on their books. With a fixed-assets-to-total-assets ratio of greater than 30%, SPB appears to be a company that invests a large amount of capital in assets that are hard to scale down on short-notice. I examine SPB’s ratio of fixed assets to total assets to see whether the company is highly exposed to the risk of this type of constraint. Therefore, this is a type of risk which is associated with higher beta. It is more difficult for companies to lower their cost, if the majority of these costs are generated by fixed assets.
#WHAT DOES SPB MEAN DRIVER#
There may be a more fundamental driver which can explain this inconsistency, which we will examine below.ĭuring times of economic downturn, low demand may cause companies to readjust production of their goods and services. It seems as though there is an inconsistency in risks from SPB’s size and industry. Therefore, investors can expect a low beta associated with the size of SPB, but a higher beta given the nature of the industry it operates in. But, SPB’s industry, real estate, is considered to be cyclical, which means it is more volatile than the market over the economic cycle. SPB has a market capitalization of €2.44B, putting it in the category of established companies, which are found to experience less relative risk compared to small-sized companies. Does SPB’s size and industry impact the expected beta? SPB’s beta indicates it is a stock that investors may find valuable if they want to reduce the overall market risk exposure of their stock portfolio. This means the stock is more defensive against the ups and downs of a stock market, moving by less than the entire market index in times of change. Sedlmayr Grund und Immobilien KGaA’s beta of 0.19 indicates that the stock value will be less variable compared to the whole stock market.
0 kommentar(er)
