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Last update on 2024-06-06

Booking Holdings (BKNG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Booking Holdings' (BKNG) financial strength with the Piotroski F-Score. Discover its 2023 score of 6/9, reflecting crucial profitability, liquidity, and efficiency metrics.

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: 6

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

Booking Holdings (BKNG) has a Piotroski F-Score of 6 out of 9, indicating a broadly positive financial position with room for improvement. Key strengths include a significant net income of $4.289 billion in 2023, positive cash flow from operations, an increasing return on assets (ROA), and a decrease in outstanding shares, reflecting solid profitability and operational efficiency. However, concerns arise from an increased leverage ratio, a decreasing current ratio, and a notable drop in gross margin, suggesting some areas of financial instability.

Insights for Value Investors Seeking Stable Income

Considering its Piotroski F-Score of 6, Booking Holdings appears to be a relatively strong investment but not without certain risks. The positive indicators in net income, cash flow, and share buybacks are promising, suggesting good profitability and operational efficiency. However, the increase in leverage and decrease in liquidity and gross margin deserve careful monitoring. Potential investors should consider these mixed signals and weigh the benefits against the risks before making a decision.

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

Profitability of Booking Holdings (BKNG)

Company has a positive net income?

Net income represents a company's total earnings or profit. A positive net income indicates that a company is profitable while a negative net income means a company is experiencing a loss.

Historical Net Income of Booking Holdings (BKNG)

In 2023, Booking Holdings (BKNG) reported a net income of $4,289,000,000 which is considerably positive. This significant profit not only earns the company 1 point according to the Piotroski Analysis but also reflects a highly profitable year. Furthermore, analyzing the historical data, BKNG has consistently shown positive net profits over the past two decades with exception to 2020. A sharp rise in net income from $3,058,000,000 in 2022 to $4,289,000,000 in 2023 suggests robust financial health and operational efficiency. Overall, this trend bodes well for the company's long-term profitability and shareholder value.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash a company generates from its normal business operations. A positive CFO showcases that a company can generate sufficient cash to maintain and grow operations without relying on external financing.

Historical Operating Cash Flow of Booking Holdings (BKNG)

For 2023, Booking Holdings reported a CFO of $7,344,000,000, which is positive and yields a point for this criterion in the Piotroski Analysis. Analyzing historical data over the last 20 years, we observe a general uptrend in CFO with only a few minor declines or disruptions, particularly during 2020 when CFO was significantly lower at $85,000,000 due to the global pandemic impact. Nonetheless, the steady increase, especially from $2,820,000,000 in 2021 to $7,344,000,000 in 2023, confirms strong operational performance and cash generation capability, providing confidence in the company's ongoing financial health.

Return on Assets (ROA) are growing?

Examining the change in Return on Assets (ROA) deals with comparing the fiscal efficiency of a company over different periods. It reflects management's ability to utilize assets efficiently to generate earnings.

Historical change in Return on Assets (ROA) of Booking Holdings (BKNG)

For Booking Holdings (BKNG), the ROA increased from 0.1248 in 2022 to 0.1726 in 2023, signaling an improved efficiency in asset utilization. Specifically, a rise from 12.48% to 17.26% demonstrates the company's enhanced profitability and possibly stronger operational performance. Additionally, when comparing to the industry median ROA of 0.8214 in 2023, Booking Holdings still trails behind but is showing positive momentum which can attract further investor interest. Based on this analysis, BKNG earns 1 point for an improved ROA.

Operating Cashflow are higher than Netincome?

One of the criteria in the Piotroski F-Score is the comparison between Operating Cash Flow (OCF) and Net Income. This measure assesses whether the company's primary business operations are genuinely generating cash or if the net income is primarily driven by accounting adjustments. A higher OCF compared to Net Income is a positive signal.

Historical accruals of Booking Holdings (BKNG)

In 2023, Booking Holdings (BKNG) reported an Operating Cash Flow of $7.344 billion, which surpasses its Net Income of $4.289 billion. This yields a favorable OCF to Net Income ratio, indicating that the company's core operations are robust and efficient in producing cash. This criterion garners a score of 1 point under the Piotroski F-Score due to the higher Operating Cash Flow. Analyzing the past 20 years, the trend reflects consistent growth in operating cash flow and net income, although there were some dips, notably in 2020 due to the pandemic. Nonetheless, 2023 exhibits a strong recovery, showcasing the company’s resilience and efficient operational management. Hence, Booking Holdings under this metric portrays financial health and operational integrity.

Liquidity of Booking Holdings (BKNG)

Leverage is declining?

Change in Leverage measures how a company is financing its resources—either through debt or equity. A decrease in leverage suggests a more conservative strategy with reduced risk, increasing financial stability.

Historical leverage of Booking Holdings (BKNG)

Booking Holdings (BKNG) saw an increase in leverage from 0.4943 in 2022 to 0.5267 in 2023. This 6.54% rise in leverage indicates that the company is taking on more debt relative to equity. Although this might fuel greater growth in the short term, it's a negative indicator in Piotroski analysis as it implies increased financial risk. Looking at historical leverage data over the past 20 years, BKNG's leverage ratios have fluctuated significantly. In periods such as 2009 and 2010, leverage was exceptionally low, often zero. The trend of increasing leverage in recent years, especially the spike in 2020 to 0.5209, along with the current increase, underscores a growing dependency on debt financing. Hence, BKNG scores 0 points for this criterion in the Piotroski analysis, hinting at a potential flag regarding its financial strategy.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets. It is a liquidity metric important for assessing financial health.

Historical Current Ratio of Booking Holdings (BKNG)

Over the past year, Booking Holdings' Current Ratio decreased from 1.8643 in 2022 to 1.2779 in 2023, indicating a lower ability to cover short-term liabilities with short-term assets. Over the last 20 years, Booking Holdings' Current Ratio has shown variability, peaking as high as 5.7144 in 2003, far above the industry median. Despite this year's decrease, Booking Holding's Current Ratio is close to the industry's long-term median. The current trend presents a risk as it signals a decline in liquidity and raises concerns about the company's ability to manage short-term financial obligations. No additional points are awarded in the Piotroski analysis as the Current Ratio has declined in 2023.

Number of shares not diluted?

The Change in Shares Outstanding criterion in Piotroski Analyses measures whether a company has decreased its number of outstanding shares. This is important because a decrease often indicates that the company is engaging in share buybacks, which can signal management's confidence in the company's value and boost per-share earnings.

Historical outstanding shares of Booking Holdings (BKNG)

From 2022 to 2023, Booking Holdings' outstanding shares decreased from 39,872,000 to 36,140,000. This significant reduction of 3,732,000 shares suggests that the company has engaged in substantial share buybacks. Over the last 20 years, the number of outstanding shares has generally fluctuated, but the recent decrease sets a positive trend. Consequently, for the Piotroski score, Booking Holdings earns a point for reducing its outstanding shares, indicating management's confidence and enhancing shareholder value.

Operating of Booking Holdings (BKNG)

Cross Margin is growing?

Change in Gross Margin assesses year-over-year improvements in a company's manufacturing efficiency or pricing strategy.

Historical gross margin of Booking Holdings (BKNG)

In 2023, Booking Holdings (BKNG) experienced a significant reduction in Gross Margin, plummeting to 0 from 0.8558 in 2022. This marks a stark deviation from its historical trend where the Gross Margin mostly remained above the industry median. While past data would have often granted it 1 point for this metric, the Gross Margin decreased substantially in 2023, earning it 0 points. This drop could be attributed to increased cost pressures or competitive pricing tactics during the year, thus raising caution among investors.

Asset Turnover Ratio is growing?

Asset Turnover assesses a company's efficiency in using its assets to generate revenue. A higher ratio indicates greater efficiency.

Historical asset turnover ratio of Booking Holdings (BKNG)

The Asset Turnover ratio for Booking Holdings increased from 0.6975 in 2022 to 0.8597 in 2023. This rise suggests that the company has improved its efficiency in generating revenue from its assets, which is a positive development. Analyzing the long-term trend, we see significant fluctuations, peaking at 3.1466 in 2003. Despite these variations, the recent increase shows promise, contributing 1 point to the Piotroski score.


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