5 Stocks With Alarming Bankruptcy Potential According to the Altman Z-Score

investing.com:

Buying or holding stocks with a low Altman Z-score is never a good idea

The score is correct more than 70% of the time if considered two years in advance

Currently, it indicates that bankruptcy remains in the offing for the five stocks we will discuss in this article

The Altman Z-score formula, developed by Professor Edward Altman in 1960, offers a practical means to gauge a company's financial robustness and its vulnerability to bankruptcy.

With a predictive accuracy of approximately 71-72% over a two-year horizon, it serves as a valuable tool for assessing bankruptcy risks.

Here's a straightforward interpretation of the Altman Z-score:

If the computed score exceeds 2.99: This signals an enviable financial position, indicating a minimal risk of bankruptcy.

If the score falls between 1.81 and 2.99: While not exceptionally high, it suggests a moderate risk of bankruptcy within the next two years.

If the score dips below 1.81: This represents a worrisome scenario, indicating a substantial risk of bankruptcy, potentially in the near future.

Another method for evaluating a company's financial risk is through InvestingPro's financial health metric, which considers five critical categories: earnings, growth, price momentum, cash flow, and relative value. Each category encompasses a range of metrics and assigns ratings from 1 to 5.

Now, let's delve into an analysis of five stocks that, based on these metrics, might be facing a risk of bankruptcy. We will utilize the InvestingPro tool to identify these stocks and gain insights into the reasons behind their precarious financial positions.

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