BAS.DE 44.65 (+1.2%)
DE000BASF111ChemicalsChemicals

Last update on 2024-06-04

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

Understand the Piotroski F-Score Analysis of BASF (BAS.DE) for the year 2023, scoring 7 out of 9, indicating solid financial health.

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 Basf (BAS.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?
1
Asset Turnover Ratio is growing?
0

BASF (BAS.DE) has a Piotroski F-Score of 7 out of 9, based on its profitability, liquidity, and operating efficiency. Highlights include a positive net income and cash flow from operations, an improving Return on Assets, a higher current ratio, decreasing outstanding shares, and growing gross margin. However, BASF faced challenges with increasing leverage and declining asset turnover ratio. Over the years, BASF has shown resilience in profitability and has generally maintained a strong operational cash flow, but it has also experienced volatility with occasional significant losses and mixed leverage trends.

Insights for Value Investors Seeking Stable Income

BASF (BAS.DE)'s Piotroski F-Score of 7 indicates it is a financially strong company with improving trends in profitability and liquidity, albeit with some challenges in leverage and asset turnover. As an investor, it is worth looking into BASF further, given its positive cash flow, strategic share buybacks, and improving return on assets. However, it’s important to consider the risks associated with its leverage and the recent decline in operational efficiency. Overall, BASF appears to be a promising investment but warrants a careful review of market conditions and the company's strategic plans.

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

Profitability of Basf (BAS.DE)

Company has a positive net income?

Check if Netincome of 225000000 in 2023 is postive or negative. If the Netincome is postive add 1 point if not set it to 0.

Historical Net Income of Basf (BAS.DE)

For the fiscal year 2023, BASF (BAS.DE) reported a net income of $225 million. This figure is indeed positive, which adds 1 point to the Piotroski F-Score. Strategically, a positive net income generally indicates that the company's operations are profitable, which is a foundational aspect of its financial health. Examining the data over the past 20 years reveals a mixed trend. BASF has had multiple years of substantial positive net incomes often surpassing $4 billion, marking peaks such as $8.42 billion in 2019. However, occasional downturns, notably in 2020 with a significant loss of $1.06 billion and 2022 with a loss of $627 million, suggest some volatility. Despite these down years, the positive net income in 2023 reflects a rebound from previous losses and suggests potential improvement or stabilization in BASF's profitability trend.

Company has a positive cash flow?

Cash Flow from Operations (CFO) analysis assesses the company's ability to generate sufficient cash to maintain and grow its operations. A positive CFO is crucial as it indicates strong cash-generating capabilities, reflecting financial health.

Historical Operating Cash Flow of Basf (BAS.DE)

BASF has reported a positive Cash Flow from Operations (CFO) of €8,111,000,000 for 2023. Given that this number is positive, it adds a point in Piotroski's score, reaffirming the firm's ability to generate substantial operating cash flows. Demonstrating the same trend, BASF has consistently maintained positive CFOs, showing persistent strength in operating activities over the last 20 years, with steady growth especially notable in years like 2015 (€9,446,000,000) and the most recent year 2023. This trend is beneficial, reflecting the company's efficiency and financial robustnes.

Return on Assets (ROA) are growing?

Resilience in Return on Assets (ROA) is paramount for assessing a company's efficiency at generating profits relative to its total assets.

Historical change in Return on Assets (ROA) of Basf (BAS.DE)

In 2023, BASF's ROA improved to 0.0028 from -0.0073 in 2022. This increase in ROA is an encouraging sign, reflecting a return to profitability and better efficiency in asset usage. The industry median ROA has consistently been above 20%, showing that BASF has been well below the median for years. Despite the historical underperformance, the positive trend marks a significant recovery. Thus, a point is awarded due to this positive turnaround.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income measures the quality of earnings.

Historical accruals of Basf (BAS.DE)

For BASF (BAS.DE) in 2023, the operating cash flow is €8,111 million whereas the net income is €225 million. Since the operating cash flow is higher than the net income, it is a positive indicator. This suggests that BASF is generating sufficient cash flows from its operations to cover its net income, reflecting a strong quality of earnings. Looking at the last 20 years, BASF has generally managed good operating cash flow, emphasizing their operational efficiency. Therefore, this criteria yields 1 point.

Liquidity of Basf (BAS.DE)

Leverage is declining?

The Piotroski criterion examines the change in leverage to assess financial risk and stability. A decreasing leverage ratio is favorable.

Historical leverage of Basf (BAS.DE)

Upon comparing leverage ratios, BASF's leverage increased from 0.1936 in 2022 to 0.2377 in 2023. This represents an increase, negatively impacting their score for this criterion. An examination of the 20-year leverage trend reveals moments of both increases and decreases. The current leverage level is higher than it has been in most of the previous two decades. Higher leverage indicates greater financial risk, potentially making the company more vulnerable to economic downturns or fluctuations in market conditions. Therefore, the leverage ratio being higher in 2023 means the criterion scores a 0.

Current Ratio is growing?

The Current Ratio is calculated by dividing a company's current assets by its current liabilities. It is a liquidity ratio, which measures a company's ability to pay short-term obligations. A higher current ratio indicates a stronger liquidity position, making it vital for assessing the reliability of a company’s financial health.

Historical Current Ratio of Basf (BAS.DE)

BASF's Current Ratio increased from 1.8308 in 2022 to 1.983 in 2023, which is an improvement and accrues one point under the Piotroski Analysis. This indicates BASF has enhanced its short-term liquidity position. The company's Current Ratio has generally varied over the last 20 years, reaching its highest at 2.7447 in 2003 and its lowest at 1.3056 in 2008. Compared to the industry median of 1.5873 in 2023, BASF’s enhanced ratio also indicates a stronger liquidity standing within its industry. Therefore, this trend is good.

Number of shares not diluted?

A decrease in outstanding shares often signifies share buybacks, which can be beneficial for existing shareholders by increasing earnings per share.

Historical outstanding shares of Basf (BAS.DE)

For Basf (BAS.DE), the outstanding shares decreased from 901,754,000 in 2022 to 892,641,000 in 2023. This reduction amounts to approximately 1%, thus earning a point in the Piotroski Analysis. Over the past 20 years, the number of outstanding shares has generally trended downward, from 1,126,000,000 in 2003 to the current level in 2023. This prolonged reduction trend suggests a historical pattern of share buybacks, indicating management's focus on enhancing shareholder value. Therefore, the decrease in outstanding shares in 2023 is a good sign.

Operating of Basf (BAS.DE)

Cross Margin is growing?

The Gross Margin criterion measures a company's operational efficiency in converting revenue into gross profit. It's crucial because higher margins indicate better cost control relative to revenue, implying a competitive advantage.

Historical gross margin of Basf (BAS.DE)

In 2022, BASF (BAS.DE) recorded a Gross Margin of 0.2412, while in 2023, it slightly increased to 0.2424. This increase results in adding 1 point to the Piotroski F-Score for this criterion. Although marginal, this increase is positive and suggests a minute improvement in operational efficiency. Historically, BASF has had varying gross margins with a peak of 0.3266 in 2004 and a low of 0.2412 in 2022. With the industry's median gross margin at 0.2238 for 2023, BASF's margin continues to outperform the industry standard, despite showing slight fluctuations over the past two decades. Therefore, the trend for 2023 can be viewed as favorable.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. It is important as it reflects operational efficiency.

Historical asset turnover ratio of Basf (BAS.DE)

The Asset Turnover ratio decreased from 1.0163 in 2022 to 0.8513 in 2023. This is not a positive trend for BASF (BAS.DE), as a lower Asset Turnover signifies a reduction in operational efficiency. The significant drop can be attributed to multiple factors such as lower sales, higher asset base, or an amalgamation of economic conditions affecting demand. Comparing historical data further emphasizes 2023's decline, showing variability in prior years but usually around or above 1 before the noticeable decrease after 2013.


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