Last update on 2024-06-06

Aptiv (APTV) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Discover Aptiv's 2023 Piotroski F-Score analysis. Explore profitability, liquidity, and operational efficiency. Aptiv scores 6/9, showing areas of financial strength.

Short Analysis - Piotroski Score: 6

We're running Aptiv (APTV) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Aptiv (APTV) was assessed using the Piotroski F-Score, a 9-criteria model evaluating financial strength based on profitability, liquidity, and operating efficiency. Aptiv scored 6 out of 9, showing a positive net income of $2.94 billion and a solid operating cash flow of $1.9 billion in 2023. The return on assets (ROA) improved to 0.1269 in 2023. The current ratio rose to 1.7153, indicating stronger liquidity. However, there were some areas of concern: operating cash flow was lower than net income, leverage increased slightly, and outstanding shares were diluted. Additionally, the gross margin of 17.15% is still below the industry median of 19.6% and the asset turnover ratio decreased slightly.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, Aptiv shows a mix of strengths and weaknesses in its financial health. The company is profitable with good liquidity and improved ROA, but there are areas needing attention such as cash flow quality and leverage. Given these mixed signals, it could be wise for potential investors to conduct further research before making a decision. Aptiv could be a good investment if it addresses its leverage and asset utilization issues. Long-term trends and industry comparisons should also be considered.

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

Profitability of Aptiv (APTV)

Company has a positive net income?

Net income represents a company's total earnings minus expenses, taxes, and costs. Positive net income indicates profitability.

Aptiv's net income for 2023 stands at $2.94 billion. This positive net income suggests the company is profitable, thus earning 1 point for this criterion. Coupled with retrospective data, from 2003 to 2022, the trend has seen fluctuations, including a notably high net income of $9.3 billion in 2009 and some leaner years like $590 million in 2021. While there are inconsistencies, the recent uptrend is promising and reflects robust performance amid economic cycles.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a measure of the cash generated by a company's regular business operations over a period of time. It is important because it indicates the company's ability to generate sufficient cash flow to maintain and grow its operations without external financing.

For the year 2023, Aptiv (APTV) reported a positive Cash Flow from Operations (CFO) of $1,896,000,000. This is indeed a strong indicator of financial health, as it signals the company's capability to generate cash from its core operations. In comparison to historical data, such as 2003 with only $737,000,000 and even a negative CFO in 2009 (-$98,000,000), this substantial amount reveals substantial growth and operational efficiency. Aptiv's steadily improving CFO over the last two decades assures investors of its robust business model and sound fiscal management. Given the positive figure for 2023, the company earns 1 point for this Piotroski criterion.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA): ROA measures how efficiently a company uses its assets to generate profit. An increase in ROA is a positive signal, indicating better management efficiency.

In 2023, Aptiv's ROA stood at 0.1269, a significant improvement from the 0.0298 reported in 2022. This change reflects an increase in management efficiency and asset utilization. Despite the positive trend, it's important to note that it is still below the industry median ROA of 0.196 for 2023, suggesting that while Aptiv has improved, it may still lag behind some peers in terms of asset utilization efficiency.}

Operating Cashflow are higher than Netincome?

The Operating Cash Flow (OCF) exceeding Net Income distinguishes a company capable of converting its sales into actual cash, suggesting robust earnings quality.

In 2023, Aptiv's Operating Cash Flow (OCF) is $1.896 billion while its Net Income (NI) stands at $2.938 billion. Given that OCF is lower than NI, this criterion fails, resulting in 0 points. This trend could raise concerns over the quality of income and potential accrual accounting practices. Monitoring the large gap between cash flow and net income might indicate a closer review is needed, although it is notable that Aptiv has often had OCF lag behind net income over decades, as in 2003 thru 2022 compared to select previous years. High accruals in other years can partially explain this disparity.

Liquidity of Aptiv (APTV)

Leverage is declining?

Change in Leverage assesses a company's ability to reduce its financial risk. A decrease suggests conservative financial management.

Aptiv's Leverage increased from 0.2725 in 2023 compared to 0.3117 in 2022, indicating a rise in the financial risk. Historically, the leverage has shown fluctuations, peaking at 0.3396 in 2017. This recent increase might signify aggressive growth strategies or rising debt levels, which investors should monitor closely.

Current Ratio is growing?

The Current Ratio indicates a company's ability to pay short-term obligations. An increasing ratio suggests improved liquidity.

In 2023, Aptiv's Current Ratio increased to 1.7153 from 1.6 in 2022. This positive change adds 1 point. Historically, Aptiv's 2023 ratio aligns well with the industry median of 1.7153. Aptiv's liquidity improvement is commendable within a 20-year context where ratios fluctuated from 1.3 to 2.0.

Number of shares not diluted?

Change in Shares Outstanding criterion for Aptiv (APTV)

The Outstanding Shares for Aptiv have seen an increase from 270,900,000 in 2022 to 276,920,000 in 2023, indicating that Outstanding Shares have increased, resulting in 0 points for this criterion.

Operating of Aptiv (APTV)

Cross Margin is growing?

Change in Gross Margin assesses whether the company is improving its profitability from its core activities over time by comparing the latest gross margin to the previous year's value.

The gross margin for Aptiv increased from 0.1507 in 2022 to 0.1715 in 2023, earning it 1 point for this criterion. This shows an improvement in profitability from core operations. Over the last 20 years, Aptiv's gross margin fluctuated significantly, reaching a high of 21.33% in 2016. Moreover, it's worth noting that Aptiv's current gross margin of 17.15% is still below the industry median of 19.6% for 2023, indicating room for further improvement relative to industry peers.

Asset Turnover Ratio is growing?

Asset Turnover is a financial measure that calculates the ratio of a company's sales or revenues to its assets. It is an indicator of how efficiently a company is using its assets to generate revenue.

Evaluating Aptiv's asset turnover ratio for 2023 (0.8659) and 2022 (0.8768), we find a minor decrease. Despite a multi-decadal trend where it peaked at 1.6284 in 2006 and gradually declined, 2023 still exhibited a small dip. Thus, no points should be added for 2023.