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Last update on 2024-06-07

Biomarin Pharmaceutical (BMRN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Detailed Piotroski F-Score analysis of BioMarin Pharmaceutical (BMRN) for 2023, scored 6/9. Insights on profitability, liquidity, and operational 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 Biomarin Pharmaceutical (BMRN) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is used to evaluate the financial strength of Biomarin Pharmaceutical (BMRN) based on 9 criteria involving profitability, liquidity, and leverage. The company's overall Piotroski score is 6 out of 9, indicating a reasonably strong financial position. Positives include positive net income and cash flow, improving return on assets (ROA), increased gross margin, and a growing asset turnover ratio. However, the company faces challenges with rising leverage, a declining current ratio, and slight share dilution.

Insights for Value Investors Seeking Stable Income

Biomarin Pharmaceutical's Piotroski F-Score of 6 suggests the company has a generally robust financial standing with room for improvement. Investors might find this stock attractive due to its profitability and operational efficiency. However, potential investors should also consider the increased leverage and liquidity risks. Further research is recommended, particularly concerning the rising debt levels and their implications for future growth and financial stability.

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

Profitability of Biomarin Pharmaceutical (BMRN)

Company has a positive net income?

Net income refers to the profitability of the company after all expenses and taxes have been deducted from total revenue. A positive net income indicates profitability and adds one point in the Piotroski score.

Historical Net Income of Biomarin Pharmaceutical (BMRN)

In 2023, Biomarin Pharmaceutical (BMRN) reported a net income of $167,645,000, which is positive. Over the past 20 years, the company has faced several years of negative net income, including a drastic drop in 2017 with a net income of -$630,210,000. However, the trend has improved recently, showing significant recovery margins since 2020. With the positive net income in 2023, BMRN earns 1 point in the Piotroski score.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is the cash generated from normal business operations. It is crucial as it indicates whether a company can generate sufficient cash flow to maintain and grow its operations.

Historical Operating Cash Flow of Biomarin Pharmaceutical (BMRN)

Biomarin Pharmaceutical (BMRN) has a CFO of $159.26 million in 2023, which is positive. This indicates a strong operational performance, adding 1 point to Piotroski’s score. Over the last 20 years, BMRN has experienced fluctuations, with both negative and positive CFO trends, but the recent years indicate an upward trend, with the CFO turning positive starting from 2019.

Return on Assets (ROA) are growing?

Change in ROA is an important measure of a company's efficiency in generating profits from its assets. For Biopharmaceutical companies, a growing ROA might indicate successful drug development and commercialization.

Historical change in Return on Assets (ROA) of Biomarin Pharmaceutical (BMRN)

In 2023, BioMarin Pharmaceutical (BMRN) reported an ROA of 0.0254, which is an improvement from its ROA of 0.0229 in 2022. This increase of 0.0025 points represents a positive trend, albeit a modest one. ROA measures the company's ability to generate profits from its assets, and an increase signifies better operational efficiency. However, it's worth noting that the ROA is still significantly below the industry median of 0.4518 for 2023. This extensive gap indicates that while BioMarin is improving, it still has considerable ground to cover compared to its industry peers. Another dimension to consider is the Multi-Year evolution. For instance, in 2018, BioMarin's operating cash flow was only $20,208,000, which escalated to an impressive $159,259,000 by 2023. This demonstrates a substantial improvement in cash-generating capacities, although it hasn't fully translated into higher ROA as seen in the industry-leading companies. Hence, for this criterion, BMRN scores 1 point as there is a year-over-year improvement in ROA.

Operating Cashflow are higher than Netincome?

Operating cash flow measures the cash generated by a company's regular business operations and is crucial for assessing liquidity, while net income is the total profit after expenses. Higher operating cash flow indicates better cash management.

Historical accruals of Biomarin Pharmaceutical (BMRN)

For 2023, BioMarin Pharmaceutical's operating cash flow was $159.26 million while its net income was $167.65 million. This results in an accrual ratio of 0.0285, which is lower than the last three years but indicates that the company assigns positive additions. Although operating cash flow is slightly lower than net income, the consistent positive trend in both metrics over recent years suggests good cash management. Thus, even if it doesn't score a point in this particular Piotroski's criterion, the overall financial health remains solid.

Liquidity of Biomarin Pharmaceutical (BMRN)

Leverage is declining?

Change in leverage refers to how much debt a company is using to finance its assets compared to its equity. A decrease in leverage risk signifies strengthening financial integrity.

Historical leverage of Biomarin Pharmaceutical (BMRN)

In examining Biomarin Pharmaceutical's change in leverage, we see that the company's leverage ratio was 0.1699 in 2022, increasing to 0.0867 in 2023. Hence, leverage has increased. Over the last 20 years, however, the leverage trend shows significant fluctuations but mostly a downward trajectory, especially remarkable post-2015. Since increased leverage pulls down the F-Score, we set this criterion at 0 point for Piotroski analysis interpretation. Historically, BMRN achieved impressive reduction in leverage from peaks like 0.9788 in 2004 to the lowest of 0.0867 in 2023. This leverage augmentation might raise flags of increased financial risk due to higher borrowing; it's crucial to see this aligned with investment growth or other strategic financial decisions.

Current Ratio is growing?

The Current Ratio examines a company's ability to cover its short-term liabilities with its short-term assets. It's crucial because it indicates financial stability.

Historical Current Ratio of Biomarin Pharmaceutical (BMRN)

In 2023, the Current Ratio for BioMarin Pharmaceutical (BMRN) stands at 2.5115, reflecting a significant decline from 2022's ratio of 4.6723. This downward trend is concerning as it implies a decreased ability to cover short-term obligations. Historically, BMRN maintained a relatively high Current Ratio with figures peaking at 17.5785 in 2003, far surpassing the industry median. However, the current ratio has steadily shifted closer to industry norms over the years. BMRN’s 2023 ratio considerably lags behind the industry median of 5.7831, highlighting potential liquidity issues. Given this decline, no point is awarded.

Number of shares not diluted?

Change in Shares Outstanding refers to the change in the number of shares a company has issued over a specific period.

Historical outstanding shares of Biomarin Pharmaceutical (BMRN)

The Outstanding Shares for BioMarin Pharmaceutical (BMRN) in 2022 were 185,266,000 and increased to 187,834,000 in 2023. This indicates that the Outstanding Shares have increased by 2,568,000 shares or around 1.39%. In the context of the Piotroski Analysis, this is a negative indicator for the company's financial health and would result in a score of 0 for this criterion. Historically, we can see a notable trend of increasing shares over the last 20 years, which might suggest continuous dilution of existing shares and could be a point of concern for investors focusing on ownership value.

Operating of Biomarin Pharmaceutical (BMRN)

Cross Margin is growing?

Gross Margin is a crucial metric representing the proportion of money left over from sales after deducting the cost of goods sold. It is reflective of a company's financial health and efficiency in producing goods. A higher Gross Margin indicates better efficiency in managing production costs.

Historical gross margin of Biomarin Pharmaceutical (BMRN)

Comparing Biomarin Pharmaceutical's Gross Margin for 2022 and 2023, we see an increase from 0.7692 to 0.7872. This rise suggests an improvement in their efficiency, earning them 1 point in this criterion of the Piotroski Analysis. Interestingly, although in 2022 their Gross Margin (0.7692) was relatively in line with industry standards (0.6813), 2023 saw increased competitiveness, as the industry median dropped to 0.4518 while Biomarin's metric rose. Over the past 20 years, their Gross Margin has generally exceeded the industry median, except for a noticeable decline in 2020. However, the recent trend reversing that slump and moving towards their 2003 peaks could signal strong operational health.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in generating sales from its assets. A higher ratio indicates improved efficiency.

Historical asset turnover ratio of Biomarin Pharmaceutical (BMRN)

For Biomarin Pharmaceutical (BMRN), the Asset Turnover increased from 0.3386 in 2022 to 0.3661 in 2023, marking an improvement. An increase in Asset Turnover suggests that the company is using its assets more effectively to generate revenue. This year-on-year improvement, along with a comparison over the past 20 years, demonstrates a positive trend in operational efficiency. Thus, Biomarin earns 1 point for this criterion.


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