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Last update on 2024-06-05

Ameren (AEE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Ameren (AEE) Piotroski F-Score Analysis 2023: Financial review and Piotroski Score of 6/9 for profitability and liquidity insights.

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 Ameren (AEE) 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?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score assesses a company's financial strength based on nine criteria. Ameren (AEE) scores a 6 out of 9, indicating fair financial health. They demonstrate strong profitability with positive net income and growing cash flow, which also reflects operational efficiency. The company reports a slightly improved Return on Assets and improving Gross Margin, indicating effective cost management. However, Ameren struggles with increasing leverage and a decreasing current ratio, suggesting rising debt and a dip in short-term financial health. The asset turnover ratio also continues to decline, pointing to lowered efficiency in asset usage.

Insights for Value Investors Seeking Stable Income

Based on Ameren's Piotroski F-Score, it could be considered a moderately strong investment. The company demonstrates solid profitability with consistent positive net income and impressive cash flow. However, potential investors should be cautious about the increasing debt levels and declining current ratio, as these could affect long-term financial stability. It might be worth looking into Ameren further if they can manage their leverage and improve asset efficiency. Overall, it’s a fairly stable stock for conservative investors but one should pay attention to how they navigate their debt and liquidity issues moving forward.

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

Profitability of Ameren (AEE)

Company has a positive net income?

Net income indicates the overall profitability of a company after all expenses. Positive net income is crucial for long-term growth.

Historical Net Income of Ameren (AEE)

Ameren (AEE) reported a net income of $1,152,000,000 for 2023, which is positive. This is an increase from 2022's net income of $1,074,000,000 and continues a positive trend over the past decade. For 19 out of the last 20 years, Ameren has reported a positive net income, except in 2012 when the net income was -$974,000,000. This consistency in generating positive earnings underscores Ameren's ability to sustain profitable operations, making it a financially healthy company by this criterion. Consequently, Ameren scores 1 point for the net income criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is an essential indicator of a company's financial health. A positive CFO suggests that the company is generating enough cash from its core business operations.

Historical Operating Cash Flow of Ameren (AEE)

For the year 2023, Ameren (AEE) has reported a CFO of $2.564 billion, which is indeed a positive cash flow. This reflects a substantial improvement compared to the last 20 years, showing a robust upward trend from $1.031 billion in 2003. With the exception of fluctuations during the years, the company has demonstrated a consistent ability to generate cash through its operating activities. This strong performance earns Ameren a score of 1 point in this Piotroski criterion, signifying good financial health and operational efficiency.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) signifies the company's efficiency in generating income relative to its assets. An increasing ROA suggests better financial performance.

Historical change in Return on Assets (ROA) of Ameren (AEE)

In 2023, Ameren's ROA slightly increased to 0.0293 from 0.0292 in 2022. Although the change is marginal, it indicates an improvement in their asset return efficiency. However, when compared to the industry median ROA fluctuating around 0.400, Ameren's ROA remains low, implying room for improvement.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income: What does it mean and why is it important?

Historical accruals of Ameren (AEE)

For the fiscal year 2023, Ameren (AEE) reported an operating cash flow of $2,564 million compared to a net income of $1,152 million. This criteria is awarded a score of 1 because the operating cash flow is higher than the net income, reflecting strong cash generation. The 20-year operating cash flow trend shows consistent growth, from $1,031 million in 2003 to $2,564 million in 2023, while net income has risen from $524 million to $1,152 million over the same period. Such growth in cash flow compared to net income indicates Ameren's robust operational efficiency and ability to generate cash beyond its profitability numbers, which is a positive sign for investors. This benefit is crucial as it underscores the company's ability to sustain and potentially grow its operations, manage debts, and pay dividends without facing liquidity issues.

Liquidity of Ameren (AEE)

Leverage is declining?

The change in leverage indicates a company's debt levels relative to its equity. A decreasing leverage ratio suggests better control over debt.

Historical leverage of Ameren (AEE)

Ameren's leverage ratio has increased from 0.361 in 2022 to 0.3703 in 2023, suggesting a rise in the company's debt relative to its equity. Over the past 20 years, leverage levels have fluctuated, with recent years showing an upward trend. This suggests heightened borrowing compared to historical levels, which could imply potential risks if this trend continues. Given these metrics, Ameren scores 0 points for this criterion as their leverage has increased.

Current Ratio is growing?

To analyze whether Ameren's current ratio has increased or decreased, we compare its current ratio for 2023 with that of 2022. An increase would indicate improved short-term financial health.

Historical Current Ratio of Ameren (AEE)

Ameren’s current ratio has decreased from 0.7926 in 2022 to 0.652 in 2023, indicating a dip in the company's ability to cover short-term obligations. This is a negative trend, and therefore, no point is added for this criterion. Historically, Ameren's current ratio over the past 20 years has generally been below the industry median. For comparison, the industry median in 2023 was 0.7878, suggesting that Ameren lags behind its peers in terms of liquidity. Therefore, this criterion scores 0.

Number of shares not diluted?

The change in shares outstanding is a key metric in the Piotroski Analysis. It reflects the company’s actions regarding capital structure and financing. If a company’s outstanding shares decrease, it often indicates share buybacks, which can be seen as a positive signal of management’s confidence in the company's prospects, thereby adding 1 point to the Piotroski Score. Conversely, an increase in shares outstanding may suggest capital raising activities, which can dilute existing shareholders' value, thus setting the score to 0.

Historical outstanding shares of Ameren (AEE)

Comparing Ameren's outstanding shares of 258,400,000 in 2022 to 0 in 2023, it appears there is a reporting error or data anomaly for 2023, because a company cannot have zero outstanding shares while still being in operation. Historically, Ameren's shares outstanding have shown fluctuations from 161,100,000 in 2003 to 258,400,000 in 2022, generally increasing over the past two decades. Therefore, setting the score to 0 based on the flawed data seems inappropriate. Assuming the data error for 2023, no deduction should be made. However, if the dataset were accurate, this metric would initially be quite concerning and typically rated as unfavorable.

Operating of Ameren (AEE)

Cross Margin is growing?

Assess whether Ameren's Gross Margin has increased when compared to the previous year and its significance in evaluating the company's financial health.

Historical gross margin of Ameren (AEE)

Ameren's Gross Margin improved from 0.4201 in 2022 to 0.4623 in 2023, marking a notable increment. Gross Margin gauges the percentage of revenue remaining after accounting for the cost of goods sold (COGS). A higher Gross Margin signifies improved efficiency in managing production costs and ultimately better profitability. With Ameren experiencing a Gross Margin increase, we attribute 1 point. This improvement is a positive signal, as enhanced Gross Margin indicates better operational efficiency and cost management. Historically, Ameren's Gross Margin in 2023 (0.4623) surpasses the industry's median (0.4109), further underlining its competitive edge. Therefore, this trend of increasing Gross Margin is genuinely encouraging for investors, suggesting robust operational performance.

Asset Turnover Ratio is growing?

The Change in Asset Turnover ratio is a measure of how efficiently a company is utilizing its assets to generate revenue. It's important in assessing the company's operational efficiency.

Historical asset turnover ratio of Ameren (AEE)

The Asset Turnover ratio for Ameren (AEE) decreased from 0.2161 in 2022 to 0.1905 in 2023, indicating a reduction in operational efficiency. Given the historical data, this drop continues a generally decreasing trend over the past 20 years, where the Asset Turnover ratio peaked at 0.3809 in 2005. Consequently, Ameren scores 0 points for this criterion, reflecting a potentially concerning trend in declining efficiency.


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