ADYEN.AS 1128.4 (-0.97%)
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Last update on 2024-06-07

Adyen (ADYEN.AS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Adyen's (ADYEN.AS) financial health using the Piotroski F-Score for 2023. Discover profitability, liquidity, and operational insights for investors.

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: 6

We're running Adyen (ADYEN.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?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

Adyen (ADYEN.AS) was evaluated using the Piotroski F-Score system, scoring 6 out of 9. The analysis reviewed 9 criteria in profitability, liquidity, and operational efficiency: 1. Profitability: Adyen showed a positive net income (€698,322,000) and strong cash flow (€1.87 billion) in 2023, both trends indicating strong financial health. Return on Assets (ROA) declined slightly, securing no points for this metric. However, operating cash flow was notably higher than net income. 2. Liquidity: Leverage decreased slightly while the current ratio increased, signifying improved liquidity. No shares were repurchased; outstanding shares increased slightly. 3. Operational efficiency: Gross margin grew significantly, but asset turnover ratio declined, indicating some operational challenges. Overall, 6 points demonstrate a balanced yet currently modestly growing financial position for Adyen.

Insights for Value Investors Seeking Stable Income

Adyen’s Piotroski score of 6 suggests a financial position that's reasonably sound with mixed performance across several criteria. While profitability and liquidity are strong as seen from its positive net income and cash flow, there are concerns like the declining Asset Turnover Ratio and slight dilution of shares. Prospective investors should look further into operational challenges and industry trends before making a decision. Overall, Adyen is worth considering, especially if improvements in operational efficiency and asset management align with your investment goals.

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

Profitability of Adyen (ADYEN.AS)

Company has a positive net income?

Check if Netincome of 698322000 in 2023 is positive or negative. If the Netincome is positive, add 1 point; if not, set it to 0.

Historical Net Income of Adyen (ADYEN.AS)

The net income of €698,322,000 in 2023 for Adyen is indeed positive. Based on the Piotroski Analyses, this criterion would add 1 point to the company’s score. Historically, Adyen's net income has shown a general upward trend, growing from €10,864,000 in 2014 to the current €698,322,000 in 2023. This increasing net income over the years indicates a robust financial health and profitability for Adyen, affirming its ability to generate sustained earnings. Consequently, this is a favorable trend.

Company has a positive cash flow?

Assessing the Cash Flow from Operations (CFO) helps determine a company's ability to generate sufficient cash to maintain operations and growth.

Historical Operating Cash Flow of Adyen (ADYEN.AS)

In 2023, Adyen reported a Cash Flow from Operations (CFO) of €1,870,040,000. This figure is significantly positive, indicating robust cash generation from its core business activities. This positive CFO is a continuation of a strong upward trend observed over the past decade, where the CFO has consistently grown from €145,781,000 in 2014 to its peak at over €2 billion in 2022, before a slight dip in 2023. The sustained positive CFO reflects well on Adyen's operational efficiency and financial health, scoring a 1 for this criterion in the Piotroski analysis.

Return on Assets (ROA) are growing?

Return on Assets (ROA) evaluates a company's ability to generate profit relative to its total assets. It's a key profitability ratio.

Historical change in Return on Assets (ROA) of Adyen (ADYEN.AS)

Adyen's ROA decreased from 0.0842 in 2022 to 0.0813 in 2023, resulting in a Piotroski score of 0 for this criterion. This decrease, although minor, indicates a slight reduction in asset efficiency. Compared to the industry median ROA, which was 0.715 in 2023, Adyen's performance lagged significantly, suggesting room for improvement. Historical analysis of Adyen's operating cash flow also shows varying growth but the current trend might signal caution for investors.

Operating Cashflow are higher than Netincome?

Examine whether the operating cash flow (OCF) is greater than the net income as this indicates earnings quality and cash flow efficiency.

Historical accruals of Adyen (ADYEN.AS)

Adyen's operating cash flow in 2023 stood at €1.87 billion, overshadowing its net income of €698 million. This disparity is substantial, far exceeding not just the net income but also demonstrating positive accruals management over the years. Indeed, since 2014, Adyen's operating cash flow has consistently outpaced net income, a healthy signal corroborated by the accruals data revealing prudent working capital management. High OCF relative to net income often suggests that earnings are cash-backed and, consequently, of high quality. Thus, Adyen secures a point here.

Liquidity of Adyen (ADYEN.AS)

Leverage is declining?

Leverage measures the ratio of a company's debt to its equity and assesses its financial stability by indicating reliance on borrowed funds.

Historical leverage of Adyen (ADYEN.AS)

Despite Adyen's leverage decreasing from 0.0223 in 2022 to 0.018 in 2023, signaling financial prudence, historical data reveals an overall rise since 2019, hinting a mixed trend.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. It's a key indicator of liquidity.

Historical Current Ratio of Adyen (ADYEN.AS)

In 2023, Adyen's Current Ratio stands at 1.4502, compared to 1.4216 in 2022. This indicates an increase, earning Adyen 1 point according to Piotroski's criteria. This trend is positive, suggesting improved liquidity. Historically, Adyen's Current Ratio has fluctuated but mostly remained under the industry median, which is 1.5348 in 2023. This long-term trend may warrant close monitoring to ensure Adyen continues to improve its liquidity position.

Number of shares not diluted?

Change in shares outstanding refers to the change in the total number of shares issued by a company. It is a measure of corporate capital structure and investor ownership.

Historical outstanding shares of Adyen (ADYEN.AS)

Based on the data provided, the outstanding shares for Adyen (ADYEN.AS) increased from 30,975,325 in 2022 to 31,012,122 in 2023, resulting in an increase of 36,797 shares. This trend indicates that there was no buyback or reduction of shares; instead, there was either an issuance of new shares or options exercised. Hence, for the Piotroski score, it would receive 0 points for this criterion. Reviewing the historical data from the last 10 years, it appears that the outstanding shares have had general fluctuations with notable decreases in 2018 and steady increases afterward. This periodic issuance might suggest capital-raising activities, but the consistent increase could indicate dilution risk for shareholders.

Operating of Adyen (ADYEN.AS)

Cross Margin is growing?

Gross margin is a company's net sales revenue minus its cost of goods sold. It is important as it measures the company’s manufacturing and distribution efficiency.

Historical gross margin of Adyen (ADYEN.AS)

Adyen's gross margin significantly improved from 0.1489 in 2022 to 0.8726 in 2023, adding 1 point according to our criteria. Over the past decade, Adyen has generally trailed behind the industry median gross margin, which peaked at 0.715 in 2023. Adyen's rapid increase places it well above the industry median and signals a major enhancement in the company's cost management and pricing strategies. For instance, Adyen's gross margin hovered around 0.1869 to 0.167 from 2019 to 2021, substantially below the industry median. This increase in gross margin is a positive sign, making the trend highly favorable.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales and is a key indicator of operational efficiency.

Historical asset turnover ratio of Adyen (ADYEN.AS)

In 2023, Adyen's Asset Turnover decreased to 0.2168 from 1.3341 in 2022. This steep decline indicates a significant reduction in the company's efficiency at generating sales from its assets, which is a concerning trend. Historically, Adyen has maintained an upward trend in its Asset Turnover Ratio from 2015 to 2022, peaking at 1.3341 in 2022. Therefore, the drop in 2023 is a worrying signal, suggesting operational challenges or inefficiencies. This criterion gets 0 points.


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