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Last update on 2024-06-05

Apple (AAPL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

In-depth analysis of Apple's Piotroski F-Score for 2023, including key financial criteria and historical trends. Find out how AAPL scores 7 out of 9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running Apple (AAPL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

We assessed Apple Inc. (AAPL) using the Piotroski F-Score, which gauges the financial strength of a company based on nine criteria related to profitability, liquidity, and operating efficiency. Apple's Piotroski Score is 7 out of 9. Some key points include: a positive net income of nearly $97 billion in 2023, strong cash flow from operations at $110.54 billion, a growing current ratio, and increasing gross margins. However, Apple's Return on Assets (ROA) slightly declined, and their asset turnover ratio also decreased, suggesting some inefficiencies in asset use.

Insights for Value Investors Seeking Stable Income

With a Piotroski Score of 7, Apple Inc. shows strong financial health and efficiency. The company has high profitability, robust cash flow, a better current ratio, and effective management in gross margins. The areas needing attention are asset utilization and operating efficiency. For investors, Apple represents a solid prospect, especially with consistent profitability and strong cash flow. Therefore, it is worth considering Apple for your investment portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Apple (AAPL)

Company has a positive net income?

Net income indicates a company's profit after all expenses and taxes have been deducted. Positive net income is indicative of a company's profitability.

Historical Net Income of Apple (AAPL)

In 2023, Apple's net income stood at $96.9 billion, which is considerably positive. Over the last 20 years, Apple’s net income has shown an impressive upward trajectory from $69 million in 2003 to nearly $97 billion in 2023. Significantly, the company has been consistently reporting positive net income. This indicates a robust and profit-making entity. Therefore, for this criterion, Apple scores 1 point as its net income is decidedly positive. Historically, Apple demonstrates impressive growth in profitability, reflecting effective cost management, product innovation, and market expansion.

Company has a positive cash flow?

The criterion examines whether a company's Cash Flow from Operations (CFO) is positive, highlighting its ability to generate cash. Positive CFO indicates good liquidity and operational efficiency.

Historical Operating Cash Flow of Apple (AAPL)

For 2023, Apple reported a CFO of $110,543,000,000, which is indeed positive. This strong cash flow position points to Apple's excellent liquidity and robust operational health. Historically, from 2003 to 2023, Apple has shown a consistently rising CFO with minor fluctuations. This trend exemplifies Apple's solid revenue-generating capability over the decades, especially in recent years where CFO figures have surpassed $100 billion. Such performance justifies awarding 1 point for the positive CFO in 2023.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures how efficiently a company is able to generate profit using its assets. It's a crucial indicator of management effectiveness in using assets to generate earnings.

Historical change in Return on Assets (ROA) of Apple (AAPL)

In 2022, Apple's ROA was 0.2836. By 2023, this figure declined to 0.275, reflecting a minor decrease. This signifies a slightly less efficient use of assets to generate earnings. Historically, Apple's operating cash flow demonstrates a robust growth trajectory, especially in the last decade, but comparing the industry median ROA, Apple was generally above average. However, the recent decline in ROA suggests potential areas of operational inefficiencies or external pressures impacting returns. Given that ROA dropped, it results in 0 points for this criterion.

Operating Cashflow are higher than Netincome?

Operating cash flow being higher than net income signals that Apple is generating a healthy cash flow from its core business operations, which is favorable for financial health.

Historical accruals of Apple (AAPL)

For Apple in 2023, the operating cash flow is $110.54 billion, significantly higher than the net income of $96.99 billion. This yields a positive point for Apple's Piotroski F-Score. The company's ability to convert earnings into cash flow indicates robust operational health and efficient management. Historically, looking at the last 20 years, Apple's operating cash flow has shown a strong upward trend, emphasizing its solid business model and consistent performance. The trend where operating cash flow consistently outpaces net income suggests favorable operating efficiencies, low receivables, and overall good financial management. Therefore, Apple earns 1 point for this criterion.

Liquidity of Apple (AAPL)

Leverage is declining?

The criterion evaluates the change in leverage, comparing the current year's leverage ratio with the previous year's. A decrease signifies better financial management.

Historical leverage of Apple (AAPL)

In 2023, Apple's leverage ratio stands at 0.2702, slightly down from 0.2805 in 2022. This reduction in leverage is favorable, indicating Apple has slightly improved its financial stability.

Current Ratio is growing?

The current ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. It's crucial for assessing liquidity and financial health.

Historical Current Ratio of Apple (AAPL)

In 2023, Apple's current ratio of 0.988 marks an improvement from 0.8794 in 2022. This increase is a positive trend and adds 1 point in the Piotroski analysis. However, it's important to note that Apple's current ratio still remains below the industry median of 1.7936 for 2023, indicating less liquidity than its peers.

Number of shares not diluted?

Change in Shares Outstanding tracks the change in the number of shares that a company has issued. This is important as issuing more shares can dilute earnings, while reducing shares can concentrate ownership and improve metrics like EPS.

Historical outstanding shares of Apple (AAPL)

Between 2022 and 2023, the outstanding shares for Apple decreased from 16,215,963,000 to 15,744,231,000. This marks a decrease of approximately 2.91%, which adds 1 point to Apple's Piotroski score for this criterion. From a broader perspective, Apple's shares outstanding have been steadily decreasing over the past 10 years, down from 26,499,400,000 in 2012 to present figures. This suggests effective buyback programs aimed at returning value to shareholders and avoiding dilution, a positive sign for investors.

Operating of Apple (AAPL)

Cross Margin is growing?

Change in Gross Margin is a significant indicator in the Piotroski Score Analysis because it shows how well a company is managing its production costs relative to its revenue. An increasing gross margin suggests improved efficiency and profitability, while a decreasing margin could indicate rising production costs or declining sales prices.

Historical gross margin of Apple (AAPL)

From 2022 to 2023, Apple's gross margin increased from 0.4331 to 0.4413. This trend is favorable, indicating an improvement in Apple's efficiency in managing its production costs. This is particularly noteworthy considering that the industry median gross margin has been relatively flat or declining over the years, hovering around 0.2762 in 2023. Apple's improved gross margin stands strong above the industry median, reflecting superior operational management and cost control, thus earning 1 point for this criterion.

Asset Turnover Ratio is growing?

The change in asset turnover measures how efficiently a company uses its assets to generate sales. An increasing asset turnover ratio generally indicates better efficiency.

Historical asset turnover ratio of Apple (AAPL)

For Apple (AAPL), the asset turnover ratio has decreased from 1.1206 in 2022 to 1.0868 in 2023. Thus, it declined indicating it used its assets less efficiently to generate sales in 2023. Historically, Apple has fluctuated in its asset turnover ratios, peaking at 1.4215 in 2005 and experiencing lows such as 0.6578 in 2017. Given this year's decline, we attribute 0 points for this criterion in the Piotroski score assessment. This trend appears suboptimal after a generally rising trend since 2020.


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