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Koninklijke Ahold Delhaize (AD.AS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Analyzing Koninklijke Ahold Delhaize's (AD.AS) Piotroski F-Score for 2023: 7/9. Insights into profitability, liquidity, and efficiency metrics.

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 Koninklijke Ahold Delhaize (AD.AS) 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

The Piotroski F-Score is a number between 0 to 9 that measures a company's financial strength, focusing on profitability, liquidity, and operating efficiency. For Koninklijke Ahold Delhaize (AD.AS), the overall Piotroski score is 7 out of 9. The analysis shows: 1. Positive net income: €1,874,000,000 in 2023. 2. Positive cash flow: €6.47 billion in 2023. 3. Declining Return on Assets (ROA). 4. Operating cash flow higher than net income. 5. Decreasing leverage ratio. 6. Rising current ratio. 7. Reduced outstanding shares. 8. Slightly improved gross margin. 9. Decreased asset turnover ratio.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Koninklijke Ahold Delhaize (AD.AS) shows strong profitability and liquidity, indicated by high net income, cash flow, and reduced leverage. However, it has some minor weaknesses like declining ROA and asset turnover ratio. With a solid Piotroski score of 7, it is worth looking into this stock for long-term investment, but be prepared for some fluctuations in efficiency metrics.

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

Profitability of Koninklijke Ahold Delhaize (AD.AS)

Company has a positive net income?

The criterion checks if the net income of Koninklijke Ahold Delhaize (AD.AS) for 2023 is positive. A positive net income would indicate profitability.

Historical Net Income of Koninklijke Ahold Delhaize (AD.AS)

The net income for Koninklijke Ahold Delhaize (AD.AS) in 2023 is €1,874,000,000, which is indeed positive. This warrants a point according to Piotroski's criteria, reflecting favorable profitability. Historically, the company has experienced variability in net income with some years showing significant gains and others losses. For instance, in 2004 the net income was substantially negative at -€436,000,000, compared to impressive highs such as €2,546,000,000 in 2022. The trend over the past few years has been generally positive, with the company being profitable since 2012.

Company has a positive cash flow?

Operating cash flow (CFO) is a measure indicating the cash generated by a company’s regular operating activities. It is crucial for assessing the firm’s core operational efficiency and financial health.

Historical Operating Cash Flow of Koninklijke Ahold Delhaize (AD.AS)

For Koninklijke Ahold Delhaize, the CFO in 2023 is positive at €6.47 billion. This is a robust indicator of the company’s operational health. Historically, Koninklijke Ahold Delhaize has consistently maintained positive CFO figures over the past 20 years, with a notable upward trend. Starting from €1.91 billion in 2003, the company has escalated its CFO to €6.47 billion in 2023, demonstrating solid growth in operational efficiency. This positive trend reinforces confidence in the company’s ability to generate sufficient cash to fuel further growth, repay debts, and provide dividends to shareholders. Therefore, Koninklijke Ahold Delhaize earns 1 point for this criterion.

Return on Assets (ROA) are growing?

ROA or Return on Assets measures the profitability relative to the company's total assets. A rising ROA indicates better financial health and efficient asset utilization.

Historical change in Return on Assets (ROA) of Koninklijke Ahold Delhaize (AD.AS)

The ROA for Koninklijke Ahold Delhaize (AD.AS) declined from 0.054 in 2022 to 0.0389 in 2023. Hence, according to the Piotroski score, the company would get 0 points for this criterion as the ROA did not increase. This trend signals a decline in asset profitability, which is a negative indicator. Over the past 20 years, the ROA of the company has generally trended below the industry median, which further accentuates the importance of monitoring this metric closely.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income

Historical accruals of Koninklijke Ahold Delhaize (AD.AS)

The operating cash flow for Koninklijke Ahold Delhaize (AD.AS) stands at €6,466 million for the year 2023, significantly higher than the net income of €1,874 million. This gives a positive signal when using the Piotroski F-Score, resulting in a score of 1 for this criterion. Consistently higher operating cash flow compared to net income over the last 20 years indicates a robust cash generation capability, reflecting the company's strong financial health and its ability to convert sales into actual cash efficiently. Yearly data shows a general trend of increasing operating cash flows, which fortifies the integrity of this metric.

Liquidity of Koninklijke Ahold Delhaize (AD.AS)

Leverage is declining?

This criterion evaluates the company's change in leverage, which reflects its debt levels year-over-year. A decrease implies improving financial health, potentially reducing default risk, while an increase suggests higher financial risk.

Historical leverage of Koninklijke Ahold Delhaize (AD.AS)

Comparing the leverage ratio of Koninklijke Ahold Delhaize (AD.AS) from 2022 (0.3123) to 2023 (0.307), it is evident that the leverage has decreased, warranting a score of 1 according to the Piotroski F-Score methodology. The trend of leverage over the past 20 years shows a significant shift, especially when comparing the values from 2019 onward, but the recent decrease indicates a positive trend in managing the company's debt levels more prudently.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. It is important to consider as it provides insight into the company's short-term liquidity.

Historical Current Ratio of Koninklijke Ahold Delhaize (AD.AS)

However, the upward trend from 2022 to 2023 is a marginal positive indicator, adding one point for Piotroski analysis based on this criterion, but it still reflects a need for further improvement to match or exceed the industry median.

Number of shares not diluted?

Change in Shares Outstanding refers to the fluctuation in the number of shares that a company has issued and are held by investors. This criterion is vital as it shows if the company is buying back shares or issuing new ones, influencing stakeholders' equity and EPS calculations.

Historical outstanding shares of Koninklijke Ahold Delhaize (AD.AS)

Looking at the data, Ahold Delhaize’s outstanding shares decreased from 995 million in 2022 to 962 million in 2023. This reduction is an indication that the company possibly bought back shares, a trend that often positively signals the company’s confidence in its own financial health and stability. Moreover, this has a positive impact on the Earnings Per Share (EPS) as the profit is distributed among fewer shares. Historically, the Outstanding Shares have shown a decreasing trend from a high of 1.28 billion in 2017 to 962 million in 2023, signifying consistent buy-back activities which can be viewed positively from an investor’s perspective. Thus, on this criterion, Ahold Delhaize scores 1 point.

Operating of Koninklijke Ahold Delhaize (AD.AS)

Cross Margin is growing?

The criterion examines the change in gross margin from one year to the next. An increase in gross margin implies greater efficiency in production or cost management, which is crucial for profitability.

Historical gross margin of Koninklijke Ahold Delhaize (AD.AS)

In 2023, Koninklijke Ahold Delhaize's gross margin increased slightly to 0.2681 from 0.2678 in 2022, marking an increase. This 0.0003 improvement, while modest, suggests the company has made marginal gains in controlling production costs or pricing strategy. Over the past 20 years, the gross margin has generally been stable with minor ups and downs, reaching a high of 0.2753 in 2020. When compared to the industry's median gross margin for 2023, which stands at 0.2676, Ahold Delhaize's gross margin is slightly above the median, indicating that it is performing well within industry norms. Therefore, for this criterion, they earn 1 point.

Asset Turnover Ratio is growing?

The asset turnover ratio measures a company's efficiency in generating sales from its assets by comparing net sales to average total assets. A higher ratio indicates better efficiency.

Historical asset turnover ratio of Koninklijke Ahold Delhaize (AD.AS)

The asset turnover ratio for Koninklijke Ahold Delhaize (AD.AS) has slightly decreased from 1.8455 in 2022 to 1.8396 in 2023. While the change is minimal, it indicates a minor decline in the efficiency of using its assets to generate revenue. Given that an increase is optimal for this criterion, Ahold Delhaize scores 0 points in the Piotroski analysis for this metric.


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