Arcadia Biosciences Stock Appears To Be Possible Value Trap

GuruFocus.com
·4 min read

- By GF Value

The stock of Arcadia Biosciences (NAS:RKDA, 30-year Financials) is estimated to be possible value trap, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $2.51 per share and the market cap of $53.6 million, Arcadia Biosciences stock gives every indication of being possible value trap. GF Value for Arcadia Biosciences is shown in the chart below.


Arcadia Biosciences Stock Appears To Be Possible Value Trap
Arcadia Biosciences Stock Appears To Be Possible Value Trap

The reason we think that Arcadia Biosciences stock might be a value trap is because Arcadia Biosciences has an Altman Z-score of -4.15, which indicates that the financial condition of the company is in the distressed zone and implies a higher risk of bankruptcy. An Altman Z-score of above 2.99 would be better, indicating safe financial conditions. To learn more about how the Z-score measures the financial risk of the company, please go here.

Link: These companies may deliever higher future returns at reduced risk.

Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Arcadia Biosciences has a cash-to-debt ratio of 2.75, which which ranks better than 72% of the companies in Agriculture industry. The overall financial strength of Arcadia Biosciences is 4 out of 10, which indicates that the financial strength of Arcadia Biosciences is poor. This is the debt and cash of Arcadia Biosciences over the past years:

Arcadia Biosciences Stock Appears To Be Possible Value Trap
Arcadia Biosciences Stock Appears To Be Possible Value Trap

It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Arcadia Biosciences has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $8 million and loss of $0.4 a share. Its operating margin is -268.76%, which ranks in the bottom 10% of the companies in Agriculture industry. Overall, GuruFocus ranks the profitability of Arcadia Biosciences at 1 out of 10, which indicates poor profitability. This is the revenue and net income of Arcadia Biosciences over the past years:

Arcadia Biosciences Stock Appears To Be Possible Value Trap
Arcadia Biosciences Stock Appears To Be Possible Value Trap

Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Arcadia Biosciences is -24.4%, which ranks in the bottom 10% of the companies in Agriculture industry. The 3-year average EBITDA growth rate is 56.9%, which ranks better than 92% of the companies in Agriculture industry.

Another way to look at the profitability of a company is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Arcadia Biosciences's return on invested capital is -159.43, and its cost of capital is 6.54. The historical ROIC vs WACC comparison of Arcadia Biosciences is shown below:

Arcadia Biosciences Stock Appears To Be Possible Value Trap
Arcadia Biosciences Stock Appears To Be Possible Value Trap

In summary, The stock of Arcadia Biosciences (NAS:RKDA, 30-year Financials) gives every indication of being possible value trap. The company's financial condition is poor and its profitability is poor. Its growth ranks better than 92% of the companies in Agriculture industry. To learn more about Arcadia Biosciences stock, you can check out its 30-year Financials here.

To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener.

This article first appeared on GuruFocus.

Recommended Stories

  • Anthony Davis injury update: Lakers star to resume full activity

    Lakers star Anthony Davis has been cleared to return to practice, presumably the final step before rejoining the team for the first time in months.

  • US Navy captures pyramid-shaped UFOs on video

    Investigative filmmaker Jeremy Corbell claims the video is 'probably the best UFO, military filmed footage' the world has ever seen.

  • Maxine Waters tells Jim Jordan 'shut your mouth' during congressional hearing with Fauci

    Rep. Maxine Waters ended a tense exchange between Rep. Jim Jordan and infectious disease expert Dr. Anthony Fauci during a congressional hearing .

  • Jaida Peterson was killed in Charlotte. Her sisterhood wants to know: Why?

    One friend said of the violence: “Most of the time, we don’t get no funeral or nothing. We just get our bodies found.”

  • Man stole 41 checks worth more than $700,000 from a lone mailbox in Virginia, feds say

    The 38-year-old is also accused of stealing someone’s stimulus check and making counterfeit copies.

  • Creepy ‘eyeball’ creatures wash up on Texas beach stumping experts

    ‘This one had us stumped for quite some time,’ said National Park Service officials

  • Lifting weights is the most efficient way to get a lean physique, says CrossFit competitor turned 'Wonder Woman' actress Brooke Ence

    It's a myth that weight lifting makes women bulky - strength training is great for toning and strength, she said.

  • Trevor Noah slams ‘bad apple’ argument in policing: ‘Where are the good apples?’

    “If we’re meant to believe that the police system in America, the system of policing itself is not fundamentally broken, then we would need to see good apples …” said Noah. Trevor Noah is calling out the problems with policing in America. The host of The Daily Show spoke out on Monday about the “bad apple” rationale that many use to excuse when police officers become trigger happy and shoot unarmed Black Americans.

  • Toddler found walking alone near highway while mom dined with friend, Texas police say

    Police say they found the toddler’s two siblings, ages 3 and 8, alone in a hotel room with the door ajar.

  • ‘Ridiculous.’ LeBron, Steph Curry react to another Luka Doncic buzzer-beating shot

    Luke Doncic hit a game-winning, 3-point buzzer-beating shot to lift the Dallas Mavericks over the Memphis Grizzlies.

  • Former Minnesota police officer charged in Wright death appears in court

    MINNEAPOLIS (Reuters) -The former Minnesota police officer charged with manslaughter in the fatal shooting of a young Black man during a traffic stop made her first court appearance on Thursday as the slain motorist's family called for "full accountability" for his death. Kimberly Potter, 48, who turned in her badge on Tuesday and posted $100,000 bond hours after her arrest on Wednesday, waved to the judge as she appeared for the brief hearing online, seated in her lawyer's office. She waived her right to a formal reading of the criminal complaint charging her with second-degree manslaughter for fatally shooting 20-year-old Daunte Wright on Sunday in the Minneapolis suburb of Brooklyn Center.

  • Texas' longest serving death row inmate has sentence tossed

    An appeals court has overturned the sentence of Texas’ longest serving death row inmate, whose attorneys say has languished in prison for more than 45 years because he's too mentally ill to be executed. Raymond Riles’ “death sentence can no longer stand” because the 70-year-old inmate’s history of mental illness was not properly considered by jurors, the Texas Court of Criminal Appeals ruled Wednesday. When Riles was tried, state law did not expect jurors to consider mitigating evidence such as mental illness when deciding whether someone should be sentenced to death.

  • White couple arrested for attacking interracial couple, Richland County deputies say

    The robbery and assault happened outside a Dollar Tree store on Two Notch Road, according to the Richland County Sheriff’s Department.

  • Elizabeth Warren Literally LOLs at GOP’s Supposed Breakup With Corporate America

    Photo Illustration by The Daily Beast/GettyAs Republicans castigate corporations for opposing their nationwide efforts to change voting rules, the Democratic Party’s top critics of private sector power are laughing at the notion that corporate America and the GOP have actually splintered.Republicans Can Talk Tough About ‘Woke’ Corporations—and That’s About ItLiterally.Asked on Wednesday about the idea of a rift between the GOP and big business, Sen. Elizabeth Warren (D-MA) let out a chuckle.“I think the Republicans have finally been called out,” Warren told The Daily Beast. “They think that they can pass laws to keep people from voting and otherwise undermine our democracy, and so long as they cut taxes for corporate America, everything will be sunshine and roses. They’re wrong.”The former Wall Street watchdog and progressive 2020 presidential candidate didn’t exactly give corporations moral credit for speaking out against the GOP’s voting stands. They’d simply reached their limit.“All of this is about democracy,” said Warren. “Corporations are willing to get in and throw their money around to help candidates that they're aligned with, but what we're seeing now is they're not willing to take that all the way to the point of breaking our basic democracy.”That apparent breaking point was Georgia Republicans’ bill, passed in March, to restrict several avenues of voting access after high-profile Democratic victories in the state fueled conspiracies about election integrity. Big local companies like Delta Air Lines and Coca-Cola spoke up strongly against that bill, and Major League Baseball pulled its scheduled All-Star Game from the state under pressure from their players and the public. CEOs of major companies like Pepsi and Paypal huddled recently to discuss coordinated pushback to bills similar to Georgia’s nationwide. And on Wednesday, the pages of the New York Times and Washington Post had an open letter signed by hundreds of corporations—including Starbucks, General Motors, and Google—condemning “any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”Those moves, among others, have prompted the GOP to turn on corporate America’s titans as “woke” warriors taking marching orders from Democrats, which has sparked the op-eds and headlines speculating about the schism between C-suites and the Republican Party.Not only do progressives like Warren reject the idea that this rift is real—they also reject the idea that a broader political realignment is taking place, one in which Republicans assume the role as big business’ main adversary, while Democrats gradually align with corporate interests.The de facto dean of the party’s left wing, Sen. Bernie Sanders (I-VT), put forward a simple litmus test for Republicans when asked that question. “We’ll see how they feel about asking large corporations and the wealthy to start paying their fair share,” Sanders told The Daily Beast. “Let’s see how they feel about raising the minimum wage.”The subtext for Sanders’ answer: Republicans largely don’t support those things. To pay for their proposed $2.2 trillion infrastructure plan, President Joe Biden and Democrats want to raise taxes on corporations to 28 percent, up from the 21 percent rate that the GOP codified in their 2017 tax bill. Republicans have uniformly balked at that idea.The GOP also vocally opposed an effort from Democrats to raise the federal minimum wage to $15 when Democrats pushed to add it to their COVID relief package in February. Only one Republican, Sen. Josh Hawley (R-MO), came close to endorsing the idea, backing a minimum wage hike only for the biggest corporations. Generally, he has been one of the few Republicans willing to back up criticism for corporations’ politics with some measures to restrain their power.Republicans Can Talk Tough About ‘Woke’ Corporations—and That’s About ItHawley believes the rest of his party is catching up with him, particularly on issues of antitrust, and he argued the Democratic Party is becoming the preferred party of corporate America. “The corporatist party right now, increasingly today, is the Democratic Party,” Hawley argued to The Daily Beast. “We’re in a significant realignment right now.”Many Republicans’ recent displays of antipathy toward corporate America have been largely fueled by the sense they are targeting them in one way or another, not only through the opposition to state-level voting bills, but through endorsement of “cancel culture” or censorship of conservatives.Beyond that, the declarations from numerous large companies—such as Amazon, AT&T, Mastercard, and Blue Cross Blue Shield—that they would not contribute to the campaigns of Republican lawmakers who objected to the certification of the 2020 election after Jan. 6 further rankled the party.When Sen. Marco Rubio (R-FL) recently issued a surprise endorsement of the drive to form a labor union at an Amazon warehouse in Alabama, he alluded to the mega-corporation’s devastating impact on small businesses. But most of Rubio’s firepower was reserved for Amazon’s supposed “war against working-class values” by banning conservative books from their marketplace, and their “citizen of the world” status, which he argued made the company complicit with China’s communist government.His 2016 presidential rival, Sen. Ted Cruz (R-TX), has also gone after “woke” corporations but tried to shoe-horn those criticisms into a conservative-flavored argument that power, in general, is bad. In a Tuesday tweet, Cruz declared: “Big Government is bad. Big Corporations are bad. Big Tech is bad. Big Hollywood is bad. Any massive accumulation of power is bad.”Hawley, who is leading a push to strip a century-old antitrust exemption for MLB in response to the Georgia decision, disputed the idea that Republicans’ lack of support for making corporations pay higher taxes means they are not serious about holding corporations accountable. “I don’t buy that you have to support Democrats’ policy agenda in order to have a serious critique of corporate America,” he said.Progressives are deeply skeptical of this, of course. “You can't just rhetorically say, ‘We're the party of working families,’” said Rep. Ro Khanna (D-CA), a leading House progressive who co-chaired Sanders’ 2020 presidential campaign. “What are the policies? What is one concrete policy that Republicans in the last 30 years have passed that is directly in the interests of working families, that has increased worker power compared to corporate power?”As to Hawley’s point that Democrats are more corporate, Khanna dismissed it outright. “I think we're moving the other direction,” he said.To Warren, though, it all comes back to the issue that has expanded the daylight between Republicans and corporations: voting.“Corporate America may still be willing to line up with the tax-cut Republicans, but not over something that is fundamental to democracy,” said Warren. “So, in a sense, when you asked me about just the simple realignment in politics, that’s not what it says to me. To me, it says, here’s something bigger than politics, and that corporate America recognizes it has a responsibility in America, and that responsibility is to support our democracy.”Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • While thousands waited for help, state workers gamed the system to collect jobless benefits

    Report: Employees at the Kentucky Office of Unemployment Insurance improperly took state and federal aid.

  • Leo Terrell: 'Not a single shred of evidence' shooting of Daunte Wright was racially motivated

    Fox News contributor Leo Terrell reacts to protests in Minnesota after police-involved shooting.

  • Video shows shooting in Ohio hospital

    Police body camera footage shows a routine police pat-down of a man in a hospital emergency room erupting within minutes into a fatal police shooting after the man apparently fires a gun he had concealed in his possession. (April 15)

  • Brazil's hospitals running out of sedatives as COVID-19 rages

    RIO DE JANEIRO (Reuters) -Brazil's hospitals were running out of drugs needed to sedate COVID-19 patients on Thursday, with the government urgently seeking to import supplies amid reports of the seriously ill being tied down and intubated without effective sedatives. Health Minister Marcelo Queiroga said Brazil was in talks with Spain and other countries to secure the emergency drugs. Hospitals, he added, were also struggling to get enough oxygen.

  • Staples Center buzzing again with activity before Lakers-Celtics game

    The area around Staples Center and L.A. Live had increased activity on Thursday night as fans returned to the arena to watch the Lakers-Celtics game.

  • Ivanka Trump causes MAGA meltdown after sharing photograph getting vaccine

    Trump supporters called Ivanka a ‘disappointment’ for getting the jab