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Last update on 2024-06-05

BlackRock (BLK) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze the financial health of BlackRock (BLK) for 2023 with a Piotroski F-Score of 6/9, assessing profitability, liquidity, and efficiency.

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 BlackRock (BLK) 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?
0
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

The Piotroski F-Score assesses a company's financial strength based on 9 criteria. BlackRock (BLK) received a score of 6, indicating robust financial health and potential for investment. For profitability, BlackRock shows positive net income, positive cash flow, and improved return on assets but does not have operating cash flow higher than net income. From a liquidity perspective, although leverage has increased, the current ratio is growing, and shares outstanding have decreased. When it comes to operating efficiency, the gross margin has slightly decreased, but the asset turnover ratio has improved.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score, BlackRock (BLK) with a score of 6 suggests that it is a relatively strong investment opportunity but not without areas for improvement. The company's consistent profitability and positive cash flow are favorable signs. However, the increase in leverage and slight decrease in gross margin should be monitored. For investors seeking stability with room for growth, BlackRock is worth considering. It is advisable to keep an eye on the leverage and cash flow relationship.

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

Profitability of BlackRock (BLK)

Company has a positive net income?

Net income is a key profitability indicator that reflects a company's financial performance. A positive net income indicates profitability.

Historical Net Income of BlackRock (BLK)

BlackRock's (BLK) net income for 2023 is $5.502 billion, marking a continuation of its positive net income streak observed over the past 20 years. Despite fluctuations, the steady positive net income strongly suggests robust financial health. This criterion adds 1 point to the Piotroski score since the net income is positive, demonstrating BlackRock's effective profitability over the years.

Company has a positive cash flow?

Positive cash flow from operations (CFO) indicates a company’s ability to generate sufficient revenue to maintain and grow operations.

Historical Operating Cash Flow of BlackRock (BLK)

For BlackRock (BLK), the CFO for 2023 stands at $4,165,000,000, which is positive. This is a strong indicator of financial health and operational efficiency. The company has maintained positive CFO consistently over the past 20 years, with an increasing trend over time. This strong and stable cash flow suggests that BlackRock has ample liquidity to meet its obligations and reinvest in the business. Positive cash flow is fundamental for sustaining operations and ensuring growth. Hence, BlackRock earns 1 point for this criterion.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA): This criterion compares the ROA of the current year to the previous year. An increase indicates improved asset efficiency.

Historical change in Return on Assets (ROA) of BlackRock (BLK)

BlackRock (BLK) experienced an increase in its ROA from 0.0383 in 2022 to 0.0457 in 2023. This positive trend signifies an improvement in the company’s efficiency in generating profits from its assets. By growing its ROA, BlackRock is demonstrating a more effective management of its asset base. Notably, while the company's ROA is increasing, it is also significantly lower than the industry median, which fluctuated between 0.4258 and 0.6468 over the past 20 years until 2022. This figure will account for a point under the Piotroski F-Score.

Operating Cashflow are higher than Netincome?

Operating Cash Flow greater than Net Income implies good earnings quality.

Historical accruals of BlackRock (BLK)

In 2023, BlackRock reported Operating Cash Flow of $4,165,000,000 and Net Income of $5,502,000,000. Due to operating cash flow being lower than net income, no point is awarded. Historically, this situation hints at weaker earnings quality and potential red flags. Most companies are deemed more stable and fundamentally sound if their operating cash flow exceeds net income, as it indicates the company's earnings are actually being realized in cash. Lower operating cash flow relative to net income should be carefully monitored.

Liquidity of BlackRock (BLK)

Leverage is declining?

Change in Leverage is a measure of how a company's debt levels have altered over a specific period. It's important because higher leverage implies greater risk, especially during economic downturns.

Historical leverage of BlackRock (BLK)

From 2022 to 2023, BlackRock's leverage increased from 0.0722 to 0.0787. This increase in leverage is potentially worrying as it signifies that the company is taking on more debt relative to its equity. For the Piotroski analysis, this increase would score 0 points as lower leverage is preferred. Notably, looking at historical data, BlackRock's leverage has ranged from 0.0042 in 2004 to a previous peak of 0.1373 in 2005, suggesting varied management of debt over the years.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations with short-term assets. It's calculated as current assets divided by current liabilities.

Historical Current Ratio of BlackRock (BLK)

In 2023, BlackRock's current ratio is 15.4621, compared to 13.8076 in 2022. This increase suggests improved liquidity and a stronger ability to cover short-term obligations, contributing to a positive trend for the company's financial health. Judging by the statistical range from 2010 to 2022, with ratios fluctuating between 6.1848 and 27.9241, this is a noteworthy improvement, especially when juxtaposed against the decreasing industry median from 2.0997 in 2021 to 1.5888 in 2022.

Number of shares not diluted?

Shares outstanding measures the total number of shares currently held by all shareholders. It is essential as it can indicate dilution or share buyback activities that can affect earnings per share and stock value.

Historical outstanding shares of BlackRock (BLK)

In 2022, BlackRock had 150,900,000 shares outstanding, whereas, in 2023, it had 149,300,000 shares outstanding. The number of shares outstanding decreased by 1,600,000, indicating a share buyback. This is generally a positive trend as it can signal that management believes the shares are undervalued, and it also benefits shareholders by increasing earnings per share. Consequently, in the context of the Piotroski F-score, BlackRock earns 1 point for this criterion.

Operating of BlackRock (BLK)

Cross Margin is growing?

Gross Margin indicates the percentage of revenue that exceeds the cost of goods sold, highlighting a company's efficiency in production and pricing. For BlackRock, it's crucial to compare this metric yearly to gauge profitability trends.

Historical gross margin of BlackRock (BLK)

The Gross Margin for BlackRock in 2023 stands at 0.4719, compared to 0.476 in 2022. This slight decrease suggests a minimal reduction in production and pricing efficiency. The historic data shows variability in the Gross Margin of BlackRock over the last 20 years, with notable peaks in the mid-2000s and a gradual decline afterward. Furthermore, the industry's median Gross Margin often surpasses BlackRock's margins, indicating that the company's operational efficiencies might require closer scrutiny. Despite the dip in gross margin, understanding these fluctuations provides crucial insights into BlackRock's competitive positioning and cost management strategies.

Asset Turnover Ratio is growing?

Change in Asset Turnover evaluates whether a company is using its assets more efficiently to generate revenue. An increase indicates better efficiency.

Historical asset turnover ratio of BlackRock (BLK)

BlackRock's Asset Turnover increased from 0.1323 in 2022 to 0.1483 in 2023, indicating improved efficiency in utilizing its assets to generate revenue. This is a positive trend, signifying that the company's management is becoming more effective. Over the last two decades, the Asset Turnover Ratio has fluctuated significantly, with a notable increase particularly in recent years, demonstrating a steady improvement. Thus, BlackRock earns 1 point for this criterion in the Piotroski analysis.


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