Is Party City (NYSE:PRTY) moving to revert?


USD 0.70  0.01  1.45%   

As many millenniums are trying to avoid consumer cyclical space, it makes sense to break down Party City Holdco a little further and try to understand its current market patterns. As we have suggested previously, Party City is beginning its slide as investors shift to be more bearish due to the increased sector volatility. The returns on the market and returns on Party City appear slightly correlated for the last few months. Weak basic indicators of the company may also suggest signs of long term losses for Party investors. The stock experiences a very aggressive trading activities.
Published over three months ago
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Party City Holdco's average rating is Hold from 2 analysts. Do analysts base this consensus on technical analyses? We know that typical technical analysis utilizes price momentum, patterns, and trends looking at historical prices. It aims to identify signals based on Party City market sentiment investors' perception of the future value of Party. Let us look at a few aspects of Party technical analysis.
Using predictive technical analysis, we will analyze different prices and returns patterns and diagnose historical swings to determine the real value of Party City Holdco. In general, we focus on analyzing Party City stock price patterns and their correlations with different microeconomic environment and drivers. We also apply predictive analytics to build Party City'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 Party City's intrinsic value. In addition to deriving basic predictive indicators for Party City, we also check how macroeconomic factors affect Party City price patterns. Please read more on our technical analysis page or use our predictive modules below to complement your research.
Sophisticated investors, who have witnessed many market ups and downs, frequently view the market will even out over time. This tendency of Party City's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy. Please use the tools below to analyze the current value of Party City in the context of predictive analytics.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Party City. Your research has to be compared to or analyzed against Party City's peers to derive any actionable benefits. When done correctly, Party City's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy towards taking a position in Party City Holdco.

Watch out for price decline

Please consider monitoring Party City on a daily basis if you are holding a position in it. Party City is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Party City stock to be traded above the $1 level to remain listed. If Party City stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Party City's Liquidity

Party City financial leverage refers to using borrowed capital as a funding source to finance Party City Holdco ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Party City 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. Please check the breakdown between Party City's total debt and its cash.

How does Party utilize its cash?

To perform a cash flow analysis of Party City, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Party City is receiving and how much cash it distributes out in a given period. The Party City cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Party City Net Cash Flow from Operations is fairly stable at the moment as compared to the past year. Party City reported Net Cash Flow from Operations of 51.94 Million in 2021

Payment of 35371 shares by Sean Thompson of Party City subject to Rule 16b-3

Legal trades by Party City insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Party insider trading alert for payment of common stock par value 0.01 per share common stock by Sean Thompson, Executive Vice President and Chief Commercial Officer, on 4th of November 2022. This event was filed by Party City Holdco Inc with SEC on 2022-11-04. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Detailed Perspective On Party City

The entity has a beta of 0.5638. Let's try to break down what Party's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Party City will likely underperform. The beta indicator helps investors understand whether Party City moves in the same direction as the rest of the market, and how volatile (i.e., risky) it is compared to the market (i.e., selected benchmark). In other words, if Party deviates very little from the market, it does not add much risk to the portfolio, but it also doesn't increase the expected returns. The firm reported the previous year's revenue of 2.17 B. Net Loss for the year was (6.53 M) with profit before overhead, payroll, taxes, and interest of 390.86 M.

Will Party City current slide continue?

Current skewness is at -3.7. Party City Holdco is displaying above-average volatility over the selected time horizon. Investors should scrutinize Party City Holdco independently to ensure intended market timing strategies are aligned with expectations about Party City volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Party City's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Party City's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Party City Implied Volatility

Party City's implied volatility exposes the market's sentiment of Party City Holdco stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Party City's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Party City stock will not fluctuate a lot when Party City's options are near their expiration.

Our Bottom Line On Party City Holdco

While some companies in the specialty retail industry are either recovering or due for a correction, Party may not be as strong as the others in terms of longer-term growth potentials. The inconsistency in the assessment between current Party valuation and our trade advice on Party City is due to the recent market swings and your selection of investing horizon. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Party City.

Editorial Staff

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 Ellen Johnson do not own shares of Party City Holdco. Please refer to our Terms of Use for any information regarding our disclosure principles.

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