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Last update on 2024-06-07

American Woodmark (AMWD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

In-depth Piotroski F-Score analysis of American Woodmark (AMWD) for 2023 reveals a strong financial position with 8/9 score based on profitability, liquidity, and leverage.

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: 8

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

American Woodmark (AMWD) has scored an 8 out of 9 on the Piotroski F-Score, signaling strong financial health. The company's net income for 2023 is a solid $93.72 million, up from a loss last year. Positive cash flow from operations and improved return on assets add to its profitability. Its leverage has decreased, improving its liquidity alongside a higher current ratio. The gross margin and asset turnover have both grown, reflecting better operational efficiency. However, the slight increase in outstanding shares does point to some mild dilution.

Insights for Value Investors Seeking Stable Income

With a Piotroski Score of 8, American Woodmark (AMWD) appears to be a financially strong company worth considering for investment. The improvements in profitability, liquidity, and operating efficiency are all positive indicators. It's suggested to keep an eye on any further stock dilution, but overall, AMWD shows promise for potential investors.

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

Profitability of American Woodmark (AMWD)

Company has a positive net income?

Net income should be positive as it signals a company’s profitability and capacity to generate returns.

Historical Net Income of American Woodmark (AMWD)

American Woodmark's net income for 2023 stands at $93.72 million, a clear positive figure and a strong indicator of profitability. This result merits a full point based on Piotroski's criteria. When analyzing the data spanning the last 20 years, it's notable that American Woodmark has had quite a volatile journey. From net income highs in recent years like $83.68 million in 2019 and a setback with -$29.72 million in 2022, the current positive net income demonstrates a noteworthy rebound and positive trend. This positive upswing is certainly a promising signal of recovery and growth.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is from American Woodmark (AMWD) and whether it is positive or negative. Adding 1 point if positive, otherwise 0.

Historical Operating Cash Flow of American Woodmark (AMWD)

For 2023, American Woodmark (AMWD) reported a Cash Flow from Operations (CFO) of $198.837 million, clearly a positive figure. This indicates a solid performance, featuring a substantial inflow of cash from their core operational activities, which is a positive trend. Consequently, 1 point is assigned for this criterion.

Return on Assets (ROA) are growing?

Compare the ROA of 0.0595 in 2023 to -0.0181 in 2022. If it increased, add 1 point, otherwise, set to 0.

Historical change in Return on Assets (ROA) of American Woodmark (AMWD)

American Woodmark's ROA improved from -0.0181 in 2022 to 0.0595 in 2023, a positive trend. The increase signifies improved profitability and operational efficiency, adding 1 point. Chart data indicates historical industry median ROA is much higher, highlighting room for growth.

Operating Cashflow are higher than Netincome?

This criterion examines if the company's operating cash flows are greater than its net income, which indicates earnings quality and sustainability.

Historical accruals of American Woodmark (AMWD)

In 2023, American Woodmark's operating cash flow was $198,837,000 compared to a net income of $93,723,000. The operating cash flow exceeding net income by $105,114,000 is a positive sign, suggesting robust cash generation ability and lower earnings manipulation. In terms of historical data, the operating cash flow has consistently been better than net income for several years, particularly stark in recent years, spotlighting an improvement in earnings quality. This adds 1 point in the Piotroski score for 2023.

Liquidity of American Woodmark (AMWD)

Leverage is declining?

Evaluates whether the company's financial leverage has increased or decreased, indicating changes in financial risk.

Historical leverage of American Woodmark (AMWD)

In 2023, American Woodmark's leverage was 0.2968, a decrease from 0.3686 in 2022, suggesting a reduction in financial risk. Analyzing the long-term data, the leverage exhibited a sharp increase from 0.0305 in 2017 to surpass 0.490 in 2018-2020. However, it's returned to more stable levels below 0.40 since. Hence, with the decreased leverage in 2023, the Piotroski score assigns +1 point.

Current Ratio is growing?

The change in the Current Ratio, which measures a company's ability to cover its short-term obligations, is an important liquidity indicator.

Historical Current Ratio of American Woodmark (AMWD)

In 2023, American Woodmark (AMWD) reported a Current Ratio of 2.0674, slightly up from 1.9824 in 2022. This 4.29% increase suggests better short-term financial health and greater capability to handle liabilities. Additionally, AMWD's current ratio surpasses the industry median of 1.7959, highlighting its superior liquidity position. Historically, this ratio is lower than peak values seen within the last 20 years but remains robust. Therefore, we add 1 point as the Current Ratio has indeed increased, marking a positive trend in the company's liquidity management.

Number of shares not diluted?

Change in shares outstanding is crucial as it indicates the company's strategy regarding equity financing and stock dilution.

Historical outstanding shares of American Woodmark (AMWD)

Comparing the data, the outstanding shares for American Woodmark (AMWD) increased from 16,592,000 in 2022 to 16,614,000 in 2023, reflecting a rise of 22,000 shares. Consequently, according to Piotroski's criterion, we set 0 points for this metric. Looking at the broader context over the past 20 years, American Woodmark has experienced fluctuations in its number of outstanding shares. For example, they peaked in 2003 at 16,800,000 and underwent several decreases and increases over the years, reaching a low of 14,055,000 in 2009. Consistent increases in the latter years suggest an active approach to equity financing. Nevertheless, recent stability with slight increases signals controlled share dilution.

Operating of American Woodmark (AMWD)

Cross Margin is growing?

Gross margin measures a company's financial health by showing the percent of revenue that exceeds the cost of goods sold. A higher gross margin implies better efficiency.

Historical gross margin of American Woodmark (AMWD)

American Woodmark's gross margin improved from 12.19% in 2022 to 17.30% in 2023. A rise in gross margin indicates improved efficiency in producing goods or services, adding 1 point in Piotroski score. This trend is favorable, positioning AMWD above its recent performance in 2022 and growing closer to its historical margins, although still lagging behind the industry median of 34.96% in 2023, which suggests room for further improvement.

Asset Turnover Ratio is growing?

Asset Turnover is a measure of a company's efficiency in using its assets to generate sales. It's important as it indicates how effectively a company utilizes its asset base.

Historical asset turnover ratio of American Woodmark (AMWD)

The Asset Turnover for American Woodmark (AMWD) has increased from 1.1301 in 2022 to 1.3113 in 2023, which is a positive sign. A higher Asset Turnover ratio implies better performance as the company is generating more revenue per dollar of assets. This is set against a historical backdrop where we see fluctuations — with ratios as high as 2.3432 in 2004 and lows like 1.0363 in 2019. Given this, the 2023 figure shows a strong recovery and effective asset utilization compared to recent years. Hence, we add 1 point for this increase. This positive trend should be beneficial for the overall Piotroski Score, reflecting operational efficiency and potentially better return on assets.


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