RE:Probability of Bankruptcy 75%Well not sure what "Mircroaxis" is but there are a lot of algos that try and generate a 'so-what' click out there. This is no different, and I'd categorize it as fake news. It's a lagging indicator at best, and a grubby attempt to shorehorn and stackrank a bunch of misc. ratios on a meaningless spectrum at worst. On the plus side, they pull in some snazzy statisrics jargon so they have that going for them at least.
Really it's not that complicated, man. Bankruptcy is on your radar screen? Well it is going to be based one thing:
print lumber prices. A recovey, which I think is inevitable but could be forestalled, means the assets have market value, become more liquid, AND will generate cash while being shopped.
Conversely, should lumber tank, it'll be harder to de-leverage and the cash burn will continue. Then it's the good graces of the creditiors that will prop this up. That's your doomsay scenario.
If you want to follow lumber prices check here:
https://www.cmegroup.com/trading/agricultural/lumber-and-pulp/random-length-lumber.html
Jan futures are trading up by about 25% from the summer lows. What I see this is, in BC, $400 is the rough breakeven. It's where it is now. IN the US South that's a solid cash in the bank price. Turn that shut into a Z score if you want; the range runs from $250 to $650 per thousand board feet. All the other metrcis lag and are driven by the commodity pricng which is dynamic; so they are not part of my decision making for rational investors.
In other words, there's a material chance of going broke if lumber stayed at $320/mfbm like this summer; the odds are very low and near-zero at current pricing of $402/mfbm. The real bet is if it gains another $80+ then you have 0% chance of failure and remove the need to de-leverage as the cashflow is enough to keep everyone happy.
When lumber prices change, so does risk. It's why this recent rally has seen people like me start to buy and average down on this. It's no conidence the SP moved from 20 cents to 2x that in a matter of weeks as lumber moved from the danger zone to the acceptable zone.