AME 172.73 (-0.14%)
US0311001004Industrial ProductsSpecialty Industrial Machinery

Last update on 2024-06-05

AMETEK (AME) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

AMETEK (AME) Piotroski F-Score Analysis 2023. Detailed assessment of profitability, liquidity, and efficiency with a score of 7/9.

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 AMETEK (AME) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

AMETEK (AME) has been evaluated using the Piotroski F-Score system, which measures a company's financial health through nine criteria focusing on profitability, liquidity, and operational efficiency. AMETEK achieved a Piotroski F-Score of 7 out of 9. 1. Profitability: The company has a positive net income for 2023 ($1.313 billion) and strong historical growth in net income. They also reported a positive Cash Flow from Operations ($1.735 billion) and higher operating cash flow compared to net income. 2. Liquidity: AMETEK showed a decrease in leverage, which is good, but their current ratio dropped below 1, which is problematic for short-term liabilities. 3. Operational Efficiency: AMETEK has been good at managing shareholder dilution and exhibits a growing gross margin. However, their asset turnover ratio has declined, indicating decreased efficiency in asset utilization.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 7, AMETEK (AME) appears to be a financially healthy company with strong profitability and liquidity indicators. However, there are some concerns regarding its short-term liquidity and asset turnover efficiency. For investors, AMETEK shows a strong long-term performance, making it a potentially good investment. Yet, they should be cautious about the current ratio and asset turnover ratios before making any decisions.

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

Profitability of AMETEK (AME)

Company has a positive net income?

Net income is the profit of a company after taxes and expenses and is crucial for assessing profitability.

Historical Net Income of AMETEK (AME)

For AMETEK (AME), the net income for the year 2023 is reported to be $1,313,188,000, which is positive. This indicates that the company is profitable for the year. Historically, AMETEK’s net income has shown consistent growth, increasing from $87.82 million in 2003 to over $1.3 billion in 2023. This long-term upward trend suggests effective management and operational efficiency, lending confidence to investors and analysts about the company's financial health. Therefore, according to the Piotroski F-Score criteria, AMETEK earns 1 point for having a positive net income.

Company has a positive cash flow?

This criterion involves assessing whether a company's Cash Flow from Operations (CFO) is positive. If the CFO is positive, it adds 1 point to a company's score, else 0. Positive cash flow indicates good liquidity.

Historical Operating Cash Flow of AMETEK (AME)

For AMETEK (AME), the Cash Flow from Operations in 2023 stands at $1,735,296,000, which is indeed positive. Over the past 20 years, there is a notable upward trend in CFO figures, showing a consistent increase from $154,903,000 in 2003 to $1,735,296,000 in 2023. Such a positive and growing trend underscores AMETEK's strong liquidity position and operational efficiency, which bodes well for its stability and potential for future growth. This criterion earns AMETEK a full 1 point.

Return on Assets (ROA) are growing?

Explain the criterion for AMETEK (AME) and why it is important to consider

Historical change in Return on Assets (ROA) of AMETEK (AME)

Analyzing the change in Return on Assets (ROA) is vital, as it measures a company's effectiveness in converting assets into net earnings. An increasing ROA implies that AMETEK (AME) is utilizing its assets more efficiently to generate profit, which is an indicative sign of strong operational performance and financial health.

Operating Cashflow are higher than Netincome?

Explain the criterion for AMETEK (AME) and why it is important to consider

Historical accruals of AMETEK (AME)

Comparing operating cash flow (OCF) to net income gives insight into earnings quality. A higher OCF compared to net income suggests that AMETEK (AME) is generating solid cashflows indicative of earnings sustainability and lower accounting manipulation. Over the past 20 years, AMETEK's OCF has generally aligned well with net income, but in 2023, it stands significantly higher at $1.735 billion against $1.313 billion in net income. This is a positive indicator, earning 1 point, hinting at strong cash flow generation and good earnings quality.

Liquidity of AMETEK (AME)

Leverage is declining?

Change in Leverage compares the company's debt levels relative to its equity. A decrease in leverage indicates lower financial risk.

Historical leverage of AMETEK (AME)

In 2023, AMETEK's leverage decreased to 0.1262 from 0.1737 in 2022. This is beneficial as it shows reduced dependency on debt. Historically, this is the lowest leverage ratio AMETEK has achieved in the last 20 years, indicating a significant improvement in its financial health. The declining trend in leverage can result in a lower risk profile for investors. Therefore, for the Piotroski Analysis, AMETEK scores 1 point for reducing its leverage.

Current Ratio is growing?

The Current Ratio gauges a company's ability to pay off its short-term liabilities with short-term assets. It's a measure of liquidity.

Historical Current Ratio of AMETEK (AME)

As per the given data, AMETEK's Current Ratio decreased from 1.6162 in 2022 to 0.9799 in 2023. This trend is unfavorable as it indicates that the company has reduced its capability to cover short-term liabilities compared to the previous year. Notably, AMETEK's 2023 Current Ratio of 0.9799 is significantly below the industry median of 1.7757. Therefore, for this criterion, AMETEK scores 0 points.

Number of shares not diluted?

Change in Shares Outstanding assesses whether a company is diluting its existing shareholders. A decrease indicates positive shareholder value management.

Historical outstanding shares of AMETEK (AME)

The Outstanding Shares of AMETEK (AME) decreased from 231,536,000 in 2022 to 230,519,000 in 2023. Thus, under this criterion, we add 1 point, indicating a positive trend. Reviewing the past 20 years of Outstanding Shares, we notice fluctuations but a discernible overall reduction, demonstrating a commitment to maintaining or enhancing shareholder value. For instance, share count dropped from 228,217,500 in 2003 to 230,519,000 in 2023, supporting a diligent approach in managing shares outstanding.

Operating of AMETEK (AME)

Cross Margin is growing?

Gross Margin is calculated by dividing gross profit by revenue. It measures the efficiency of production and pricing strategy.

Historical gross margin of AMETEK (AME)

In 2023, AMETEK's Gross Margin increased to 0.3614 from 0.3488 in 2022, indicating an improvement in production efficiency or pricing strategy. This trend is deemed positive. Historically, AMETEK's Gross Margin has shown a modest but consistent upward trajectory from 0.2805 in 2003 to 0.3614 in 2023. Comparatively, the industry median Gross Margin in 2023 is 0.3492, meaning that AMETEK outperforms its industry peers by a considerable margin, further strengthening the positive interpretation of its financial health.

Asset Turnover Ratio is growing?

Change in Asset Turnover assesses the efficiency of a company's use of its assets to generate sales over time.

Historical asset turnover ratio of AMETEK (AME)

The Asset Turnover ratio for AMETEK (AME) has decreased from 0.5056 in 2022 to 0.4806 in 2023. This decline indicates a reduction in efficiency in utilizing its assets to generate revenue. Over the past 20 years, the highest Asset Turnover ratio was 0.9726 in 2003, and the trend has generally been downward, reaching a low of 0.4495 in 2020. The fluctuating pattern since 2003 suggests consistent challenges in maintaining asset utilization efficiency. Therefore, no point is awarded for this criterion.


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