Tumbling to a price of $40.96 during today's afternoon trading session, shares of Carlyle are now -15.72% below their average target price of $48.6. Does this mean the stock will reverse course? Analysts are giving CG an average rating of hold and target prices ranging from 38.0 to 69.0 dollars per share.
To understand the market's outlook on the stock, we can look at Carlyle's short interest: the proportion of the share float that is tied to short positions. Behind each short position is an investor who believes that the stock will decline in the future. Here, the stock's short interest is 8.5% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Carlyle, institutional investors own 59.4% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in CG, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
To sum up, Carlyle is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a hold rating, an above average percentage of its shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about CG:
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The stock has trailing 12 month earnings per share (EPS) of $-1.78
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Carlyle has a trailing 12 month Price to Earnings (P/E) ratio of -23.0 compared to the S&P 500 average of 28.21
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The company has a Price to Book (P/B) ratio of 2.9 in contrast to the S&P 500's average ratio of 4.71
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Carlyle is a Finance company, and the sector average P/E and P/B ratios are 19.48 and 1.85 respectively
