APH 69.86 (+0.47%)
US0320951017HardwareElectronic Components

Last update on 2024-06-06

Amphenol (APH) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Amphenol (APH) - Detailed Piotroski F-Score 2023 Analysis. Assess profitability, liquidity, and operational efficiency for informed stock investments.

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: 5

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

The Piotroski F-Score of 5 out of 9 for Amphenol (APH) suggests a moderately healthy financial position. The profitability aspects are strong, with positive net income and cash flow. However, there are some concerns such as a decreasing Return on Assets (ROA) and asset turnover ratio. Liquidity indicators show mixed results with a decreasing current ratio but also a reduction in leverage. Additionally, there are concerns over a slight increase in the number of outstanding shares, hinting at possible dilution risks.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, Amphenol (APH) shows a mix of strengths and weaknesses. The firm has strong profitability and decent cash flow but struggles with asset efficiency and faces potential liquidity risks. As an investor, consider this stock if you have a moderate to high-risk tolerance and believe in the company's ability to address its operational inefficiencies. It's worth a deeper look, but additional research and consideration of market conditions might be necessary before making an investment decision.

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

Profitability of Amphenol (APH)

Company has a positive net income?

Net income indicates a company's profitability and is crucial for long-term financial stability.

Historical Net Income of Amphenol (APH)

Amphenol Corporation's net income for 2023 stands at $1.928 billion, which indeed reflects a positive trend. Over the past 20 years, Amphenol has displayed a consistent uptrend in net income. For example, back in 2003, Amphenol's net income was $103.99 million, and it has grown progressively almost every year, reaching $1.902 billion in 2022. This gradual increase showcases robust financial health and the company's ability to consistently generate profits, which is very promising from an investor's perspective. Consequently, this criterion scores a full 1 point for the Piotroski analysis. This positive trend reiterates investor confidence and financial stability, making it an attractive proposition for stakeholders.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash generated from Amphenol's core business activities. Positive means efficient operations.

Historical Operating Cash Flow of Amphenol (APH)

Amphenol's Cash Flow from Operations (CFO) for the year 2023 is $2,528,700,000. This positive CFO indicates that Amphenol's core operations are generating substantial cash. This continues a positive trend observed over the past 20 years, signifying strong operational efficiencies. Starting from a CFO of $159,404,000 in 2003, the company has shown consistent growth in its CFO year-over-year. This healthy cash flow is a favorable indicator for investors, suggesting that Amphenol is effectively converting its operations into cash, thereby adding 1 point for this Piotroski criterion.

Return on Assets (ROA) are growing?

ROA measures a company's ability to generate profit from its assets. A higher ROA indicates better financial efficiency.

Historical change in Return on Assets (ROA) of Amphenol (APH)

The Return on Assets (ROA) for Amphenol decreased slightly from 0.1268 in 2022 to 0.1211 in 2023. This represents a -4.5% decline year-over-year. Such a trend is considered disadvantageous in the Piotroski analysis as it suggests reduced operational efficiency in asset utilization. Therefore, no additional point is awarded for this criterion. Comparing with the industry median ROA, which was 0.2787 in 2023 and has generally been significantly higher than Amphenol's ROA, indicates potential issues in the company's asset profitability relative to its peers.

Operating Cashflow are higher than Netincome?

The criterion evaluates whether a company's operating cash flow is higher than its net income, which indicates better earnings quality.

Historical accruals of Amphenol (APH)

For Amphenol (APH), the operating cash flow for 2023 is $2,528,700,000, while the net income is $1,928,000,000. Since the operating cash flow is higher than the net income, this reflects a positive trend indicating high-quality earnings. Over the last 20 years, Amphenol has consistently demonstrated stable or increasing operating cash flow, underscoring the company's capacity to generate cash from its core operations. The 2023 data confirms that this trend continues, providing confidence in Amphenol's financial health. Therefore, for the Piotroski Analysis, we assign 1 point for this criterion.

Liquidity of Amphenol (APH)

Leverage is declining?

Change in leverage indicates a company's ability to manage its debt relative to its assets. Lower leverage typically implies reduced financial risk.

Historical leverage of Amphenol (APH)

Analyzing the provided data, Amphenol's leverage decreased from 0.2985 in 2022 to 0.241 in 2023. This represents a reduction in leverage, which is generally a positive indicator of financial health and risk management. When we examine the leverage trend over the last 20 years, it's evident that Amphenol has demonstrated variability, including peaks in 2003 (0.4506) and 2013 (0.3803) and troughs in 2010 (0.1991) and 2023 (0.241). Such a decrease in leverage marks a progressive step toward stabilizing the company's debt position, which could, in turn, enhance investor confidence. Therefore, based on the Piotroski criteria, Amphenol scores 1 point for this metric.

Current Ratio is growing?

current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year

Historical Current Ratio of Amphenol (APH)

The current ratio of Amphenol (APH) has decreased from 2.4211 in 2022 to 2.1681 in 2023, indicating a decline in its short-term liquidity position. Although Amphenol's current ratio remains above the industry median of 2.0742 for 2023, the decrease may signal underlying issues in the company's ability to convert its current assets to cash to cover short-term liabilities. Historically, Amphenol has shown fluctuations in its current ratio, achieving an all-time high of 3.8179 in 2015 and a low of 1.865 in 2018. Compared to the industry, Amphenol's current ratio has mostly been either in line or above the industry median over the past two decades. Given this year's decrease, Amphenol scores 0 points for this criterion.

Number of shares not diluted?

Change in shares outstanding evaluates whether a company has diluted its existing shareholders' equity by issuing more shares, which can signal potential future dilution risks.

Historical outstanding shares of Amphenol (APH)

The Outstanding Shares for Amphenol (APH) have increased slightly from 596.2 million in 2022 to 596.5 million in 2023. Although the change is marginal, it warrants close observation. Over the past 20 years, Amphenol has seen fluctuations in its outstanding shares, with a general trend of reduction—from a peak of over 705 million shares in 2003 to just under 600 million lately. This could indicate periodic share buybacks or alternate mechanisms to stabilize shareholder value. Given this year's increase, we set the score to 0.

Operating of Amphenol (APH)

Cross Margin is growing?

Comparison of gross margin from one year to the next helps gauge profitability and efficiency in production.

Historical gross margin of Amphenol (APH)

In 2023, the gross margin for Amphenol (APH) was 0.3253, an increase from 0.3191 in 2022. This represents an improvement in the company's ability to manage production costs–a positive trend that reflects enhanced operational efficiency and profitability. Additionally, comparing this to the industry median of 0.2104 for 2023, Amphenol significantly outperforms its peers, further underscoring its robust market position. These results warrant a score of 1 under the Piotroski Analysis criteria for gross margin.

Asset Turnover Ratio is growing?

Asset turnover is a key indicator that measures the efficiency of a company’s use of its assets to generate sales. Higher ratios are preferable.

Historical asset turnover ratio of Amphenol (APH)

In 2023, Amphenol's (APH) asset turnover ratio was 0.7883, a decrease from 0.8414 in 2022. This decline suggests that the company became less efficient in using assets to generate sales over the past year. Over the last two decades, Amphenol has generally seen a downward trend in asset turnover, peaking at 1.2302 in 2004 and reaching its lowest point at 0.7431 in 2020. This recent dip continues a long-term pattern, reflecting potential issues in operational efficiency that may need addressing.


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