B4B.DE 4.24 (+0.95%)
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Last update on 2024-06-07

METRO (B4B.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Discover METRO's (B4B.DE) 2023 Piotroski F-Score analysis with a remarkable 7/9 score, assessing its financial health and investment prospects.

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 METRO (B4B.DE) 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?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

We used the Piotroski F-Score to analyze METRO's financial health and investment potential. METRO scored 7 out of 9, indicating relatively strong financial standing. The analysis showed profitability improvements with a positive net income of €439 million in 2023 and increasing Return on Assets (ROA). Its Operating Cash Flow (€721 million) is also higher than net income, signaling good operational efficiency. However, leverage increased, and the gross margin decreased, hinting at some financial risks and profitability issues.

Insights for Value Investors Seeking Stable Income

METRO shows strong signs of financial health and operational efficiency, scoring 7 in the Piotroski F-Score. However, prospective investors should be cautious due to increasing leverage and declining gross margin, which may pose risks. Despite these concerns, the positive net income, stable operating cash flow, and improving asset turnover ratio suggest it is worth considering for investment, especially for those with a high-risk tolerance.

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

Profitability of METRO (B4B.DE)

Company has a positive net income?

Net income is the total profit of a company after all expenses and taxes have been deducted from total revenue.

Historical Net Income of METRO (B4B.DE)

The net income for METRO (B4B.DE) in 2023 is €439,000,000, which is positive. According to the Piotroski Score criteria, this results in adding 1 point. Historical data shows net income values across the years as follows: 2014: €40M, 2015: €254M, 2016: €506M, 2017: €325M, 2018: €344M, 2019: -€126M, 2020: €460M, 2021: -€56M, 2022: -€334M, 2023: €439M. The positive turn in 2023 demonstrates an improvement in profitability, crucial for assessing financial health.

Company has a positive cash flow?

This criterion evaluates whether METRO's operating cash flow (CFO) for the year 2023 is positive or negative. Positive CFO generally reflects the firm's ability to generate sufficient cash from its core business operations, which is crucial for sustaining operations and capital expenditures.

Historical Operating Cash Flow of METRO (B4B.DE)

The Cash Flow from Operations (CFO) for METRO in 2023 stands at €721 million, which is positive. Consequently, this criterion adds 1 point to the Piotroski Score. However, it's important to observe that the CFO has shown a declining trend over the last decade, decreasing from €1,124 million in 2014 to €721 million in 2023. This drop may imply challenges in generating cash from core operations. While the current year's positive CFO is a good indicator, the downward trend over years suggests potential underlying issues that need to be addressed strategically.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) assesses the company's ability to generate profit relative to its total assets. An increasing ROA indicates improved efficiency.

Historical change in Return on Assets (ROA) of METRO (B4B.DE)

METRO's ROA improved from -0.026 in 2022 to 0.0358 in 2023, reflecting a positive shift. This increase suggests that the company has become more efficient in using its assets to generate earnings. Over the past decade, ROA has fluctuated with a downward trend, while the industry median remained stable at roughly 15.27% in 2023. Compared to its historical operations and industry standards, METRO's currently positive ROA is notably significant but still below the industry median. This change garners a score of 1 point.

Operating Cashflow are higher than Netincome?

Explain the criterion for METRO (B4B.DE) and why it is important to consider.

Historical accruals of METRO (B4B.DE)

The Operating Cash Flow for METRO in 2023 is €721 million, which exceeds the Net Income of €439 million. Consequently, METRO scores 1 point in this Piotroski criterion. Historically, the company has shown consistent cash flow operations, peaking at €1.608 billion in 2019. While Net Income fluctuated, even recording losses in 2019 and 2021, Operating Cash Flow remained comparatively stable, indicating robust operational efficiency despite earnings volatility. A stable or higher Operating Cash Flow compared to Net Income suggests that METRO's core business remains resilient, making this trend favorable.

Liquidity of METRO (B4B.DE)

Leverage is declining?

Leverage metrics assess how much of a company's capital comes from debt. It is significant since high leverage can indicate potential risk, especially in downturns.

Historical leverage of METRO (B4B.DE)

The leverage for METRO increased from 0.2384 in 2022 to 0.2437 in 2023. Over the last 10 years, leverage fluctuated, reaching highs of 0.3448 in 2020 and lows of 0.1302 in 2017. This increase in leverage in 2023 signifies that METRO is leaning more on debt. This trend is unfavorable, and under the Piotroski Score, this criterion will receive a score of 0.

Current Ratio is growing?

This criterion evaluates METRO's liquidity by comparing its Current Ratio between two years, reflecting its ability to cover short-term liabilities with short-term assets. An improvement signifies better financial health.

Historical Current Ratio of METRO (B4B.DE)

The Current Ratio of METRO has increased from 0.7686 in 2022 to 0.7734 in 2023. This is a positive indicator, as it shows an enhancement in the company's liquidity despite being below the industry median of 1.6328 in 2023. Over the past 10 years, METRO's Current Ratio has fluctuated but remained consistently below the industry's median, underscoring liquidity challenges relative to peers. The slight increase in 2023, while positive, suggests cautious optimism but highlights ongoing struggles to match industry standards. Therefore, METRO receives 1 point for the increase.

Number of shares not diluted?

Change in Shares Outstanding evaluates whether a company has issued more shares in the recent year compared to the previous year. This can signal potential dilution of shareholder value.

Historical outstanding shares of METRO (B4B.DE)

For METRO (B4B.DE), the Outstanding Shares remained constant at 363,097,253 both in 2022 and 2023. In this context, the lack of increase or decrease means the score is 0 for this criterion. This stability can be viewed as a positive signal, indicating a lack of shareholder dilution over the past decade, which is typically preferred by investors. This factor is pivotal as issuing more shares can dilute the earning per share (EPS) and affect the share price. However, METRO has consistently maintained its shares count, reflecting sustained financial discipline.

Operating of METRO (B4B.DE)

Cross Margin is growing?

Change in Gross Margin compares the difference in gross margin from one year to the next. It measures a company's profitability level after deducting direct costs. A rising gross margin is crucial as it means the company is improving its cost efficiencies and profitability.

Historical gross margin of METRO (B4B.DE)

The Gross Margin for METRO (B4B.DE) has decreased from 0.1694 in 2022 to 0.1598 in 2023, resulting in no points awarded according to Piotroski's criteria. Gross Margin contraction can be alarming, signaling potential issues with cost management or pricing strategies. Additionally, when examining the historical context, METRO's Gross Margin exhibits a downward trend, further diverging from the industry median, which generally suggests declining cost efficiency and profitability. In comparison, the industry median gross margin has been more stable and resilient, demonstrating a generally better adaptation or management. Such statistical details earmark a relative competitive disadvantage for METRO—we must scrutinize other financial metrics closely to gauge the comprehensive health of the company.

Asset Turnover Ratio is growing?

The change in Asset Turnover Ratio for METRO (B4B.DE) assesses the efficiency with which the company is utilizing its assets to generate revenue. An increasing ratio is favorable as it indicates better asset utilization.

Historical asset turnover ratio of METRO (B4B.DE)

The Asset Turnover Ratio of METRO (B4B.DE) increased from 2.3179 in 2022 to 2.4939 in 2023, indicating improved efficiency in utilizing its assets to generate revenue. This marks an increase in the ratio, thus earning 1 point in the Piotroski analysis. Over the past decade, the trend showcases variability, with significant improvements in recent years, particularly from 2019 onwards. The increase in 2023 is consistent with a trend of improving asset utilization efficiency. Therefore, this trend is considered positive for METRO.


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