ABBV 169.22 (+0.71%)
US00287Y1091Drug ManufacturersDrug Manufacturers - General

Last update on 2024-06-14

AbbVie (ABBV) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze AbbVie's (ABBV) financial health in 2023 using the Piotroski F-Score. Assesses profitability, liquidity, and efficiency. Final Score: 5/9.

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: 5

We're running AbbVie (ABBV) 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?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is used to measure the strength of a company's financial position based on nine criteria: profitability, liquidity, and operating efficiency. AbbVie's score of 5/9 suggests moderate financial health. They score well in areas like positive net income, cash flow, high operating cash flow compared to net income, reduced leverage, and stable share count, but face challenges in terms of declining ROA, current ratio, gross margin, and asset turnover ratio, indicating some areas of concern.

Insights for Value Investors Seeking Stable Income

AbbVie's Piotroski score of 5/9 indicates moderate financial health. While the company excels in generating positive income and effective cash flow management, investors should be cautious about declines in asset efficiency and liquidity metrics. The stock could be worth looking into for its strengths, but it's crucial to consider potential risks and conduct further research before making an investment decision.

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

Profitability of AbbVie (ABBV)

Company has a positive net income?

Net income represents the company's total earnings and is critical for evaluating financial health.

Historical Net Income of AbbVie (ABBV)

In 2023, AbbVie's net income stands at $4.86 billion. This positive figure earns the company 1 point in the Piotroski score. Historically, AbbVie has shown an impressive trend in maintaining net income above $1 billion except for year 2014, where it closed at $1.77 billion. Such consistency speaks volumes about its financial stability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates how much cash a company generates from its regular business activities. A positive CFO is crucial as it signifies a company's ability to generate sufficient cash to maintain and grow operations.

Historical Operating Cash Flow of AbbVie (ABBV)

AbbVie (ABBV) shows a remarkable trend with its CFO being positive at $22.84 billion in 2023. This reflects a robust operating cash generation capability. Historical data further amplifies this positive outlook as the CFO figures have consistently grown over the past 15 years, especially since 2015, marking a significant upward trajectory from $7.54 billion in 2015 to as high as $24.94 billion in 2022. This points to strong operational efficiency and sustainability, leading to a 1-point addition in the Piotroski Analysis Score. Graphically, the long-term upward trend demonstrates resilience and adaptability in varying market conditions.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures how efficiently a company uses its assets to generate profits, crucial for assessing operational effectiveness.

Historical change in Return on Assets (ROA) of AbbVie (ABBV)

The ROA for AbbVie decreased from 0.083 in 2022 to 0.0356 in 2023, indicating a deterioration in asset efficiency. This trend is unfavourable as it suggests the company is generating lower returns on its assets compared to the previous year. Over the past 20 years, AbbVie's fluctuating operating cash flow and the industry's higher median ROA (hovering around 0.695-0.7) highlight a need for improved asset utilization. Hence, for the Piotroski Analysis, the score remains 0 points for this criterion.

Operating Cashflow are higher than Netincome?

The Piotroski F-Score gives one point if the cash flow from operations is greater than the net income. This indicates whether the company's core business operations are generating sufficient cash without relying heavily on accounting adjustments.

Historical accruals of AbbVie (ABBV)

For AbbVie (ABBV), in 2023, the cash flow from operations was $22,839,000,000 while the net income was $4,863,000,000. This is a positive indicator as the operating cash flow is significantly higher than the net income. This trend is viewed favorably as it signals strong cash generation from core business operations. Over the last 20 years, AbbVie has generally maintained a higher operating cash flow than net income, showing consistent financial health. For instance, in years like 2019 and 2021, the firm's operating cash flows were substantially higher ($13.3 billion vs. $7.9 billion and $22.8 billion vs. $11.5 billion respectively). As such, AbbVie secures 1 point for this criterion.

Liquidity of AbbVie (ABBV)

Leverage is declining?

Change in leverage assesses the variation in a company's financial structure. Lower leverage indicates reduced debt risk and better long-term financial health.

Historical leverage of AbbVie (ABBV)

In 2023, AbbVie's leverage decreased from 0.426 in 2022 to 0.3875, earning a score of 1 point in this criterion. This reduction signifies improved financial strength, stemming from effective debt management strategies. Historically, AbbVie has had fluctuating leverage, peaking at 0.7067 in 2019 and steadily decreasing since. AbbVie's continued focus on diminishing leverage reflects a prudent approach to balancing debt and equity, enhancing its risk profile and 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. A higher ratio indicates better liquidity.

Historical Current Ratio of AbbVie (ABBV)

The Current Ratio for AbbVie (ABBV) decreased from 0.9636 in 2022 to 0.8721 in 2023. This downward trend reflects a slight decrease in liquidity, indicating that AbbVie may have relatively less cushion to cover its short-term obligations compared to the previous year. Over the last two decades, AbbVie’s Current Ratio reached a peak of 3.1774 in 2019, and generally stayed below the industry's median, which was 1.2749 in 2023. Thus, based on the criterion, the point allocation remains at 0 due to the observed decrease in the Current Ratio from 2022 to 2023.

Number of shares not diluted?

Change in Shares Outstanding examines if the company is issuing more or repurchasing shares, impacting shareholder value.

Historical outstanding shares of AbbVie (ABBV)

AbbVie (ABBV) had 1.77 billion outstanding shares in 2022, decreasing slightly to approximately 1.77 billion in 2023. This marks a marginal decrease in the number of outstanding shares, which earns the company a point under this criterion. Decreasing outstanding shares can be a positive trend, indicating potential share repurchases that benefit shareholders by increasing their ownership stake and potentially boosting Earnings Per Share (EPS). Over the past 15 years, AbbVie's shares peaked in 2022 before this reduction occurred. This is a favorable trend for investors.

Operating of AbbVie (ABBV)

Cross Margin is growing?

Change in Gross Margin examines how effective a company is in making money from its core operations and rewards improvements.

Historical gross margin of AbbVie (ABBV)

For AbbVie (ABBV), the Gross Margin decreased from 0.7 in 2022 to 0.6242 in 2023, indicating a decline of approximately 10.83%. This trend is unfavorable, revealing a diminishing efficiency in the company’s core operations. Moreover, when compared to the industry median Gross Margin, which slightly increased to 0.7176 in 2023, AbbVie’s performance appears notably weaker. Over the last two decades, AbbVie’s Gross Margin has seen significant fluctuations but has largely been above the industry median until recent years. The year 2020 marked a sharp decline which continued until 2023. This negative trajectory may suggest potential challenges such as increased cost of goods sold, pricing pressure, or inefficiencies. Thus, for the criterion of Change in Gross Margin, AbbVie gets 0 points.

Asset Turnover Ratio is growing?

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales revenue. It is calculated by dividing the total revenue by total assets. This ratio is a critical barometer in determining how effectively AbbVie is utilizing its asset base to underpin sales growth and drive operational efficiency.

Historical asset turnover ratio of AbbVie (ABBV)

Comparing the latest asset turnover figures, AbbVie's ratio has decreased from 0.4069 in 2022 to 0.3972 in 2023. This declining trend suggests the company has been less efficient in employing its assets to generate revenue in the most recent fiscal year. This trend is notable, considering that AbbVie's average asset turnover ratio over the past 14 years has shown substantial variability, peaking in 2010 with a ratio of 1.4798 and subsequently trending lower. The decline from 0.4069 to 0.3972 results in a score of 0 on the Piotroski scale, signaling a potential area of concern that needs closer scrutiny, especially given the historical context of fluctuating efficiency.


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