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Last update on 2024-06-04

Proximus (BX7.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Dig into our detailed Piotroski F-Score analysis of Proximus (BX7.F) for 2023, revealing key insights into the stock's 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: 6

We're running Proximus (BX7.F) 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?
0
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

The Piotroski F-Score ranges from 0 to 9, reflecting a company's financial health based on profitability, liquidity, and efficiency criteria. We assessed Proximus (BX7.F), which scored 6 out of 9. Key points: 1. Profitability: Proximus has a positive net income of €357M and consistent positive cash flows, but declining Return on Assets (ROA) and increasing leverage are concerns. 2. Liquidity: The current ratio has improved, indicating better liquidity. However, the number of shares outstanding decreased only slightly. 3. Efficiency: Gross Margin has improved, but the Asset Turnover ratio has declined, showing reduced efficiency in using assets to generate revenue.

Insights for Value Investors Seeking Stable Income

A Piotroski Score of 6 suggests that Proximus (BX7.F) is in fairly good financial health with areas of strength in profitability and liquidity. However, concerns about declining ROA, increased leverage, and reduced asset efficiency should prompt cautious optimism. For investors looking for stable companies with some signs of resilience, Proximus might be worth considering, though keeping an eye on these negative trends is advised.

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

Profitability of Proximus (BX7.F)

Company has a positive net income?

Net income determines the profitability of the company, issued on an annual basis. Higher profitability generally indicates a healthier financial state.

Historical Net Income of Proximus (BX7.F)

For the fiscal year 2023, Proximus reported a net income of €357,000,000, which is indeed positive. Comparing this to historical data, the net income has experienced a generally declining trend, especially noticeable since 2013 when it peaked at €654,000,000. While the positive net income for 2023 is a good indicator in itself, it still marks one of the lowest annual incomes in the last 20 years, indicating the company might be under some financial pressure. For Piotroski analysis purposes, this adds 1 point as the net income is positive, but long-term investors should be cautious about the declining trend.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion of the Piotroski Analysis demands that the CFO be positive for an additional point to be scored for strong financial health.

Historical Operating Cash Flow of Proximus (BX7.F)

For Proximus (BX7.F), with CFO $1.62 billion in 2023, the cash flow is indeed positive. According to the Piotroski Analysis, this criterion is satisfied, and thus we should add 1 point. The historical data also suggests this has been a consistent trend, as the cash flow has been positive for the last 20 years, even showing a general pattern of operational stability and resilience. Such strong operational cash flows over time reinforce investor confidence and signal robust earnings quality, making it a good sign for Proximus.

Return on Assets (ROA) are growing?

Return on Assets (ROA) is a measure of how efficiently a company can manage its assets to produce profits. Higher ROA indicates better management and efficient asset utilization.

Historical change in Return on Assets (ROA) of Proximus (BX7.F)

In 2023, Proximus (BX7.F) reported a Return on Assets (ROA) of 0.0329, a decline from 0.0452 in 2022. This reflects a decrease in profitability and efficiency in managing assets. While it generated €1,620 million in operating cash flow, this reduction evidences inefficiencies or increased costs. It's critical for Proximus, especially since the 20-year industry median ROA stood significantly higher at 0.6122 in 2023. The score for ROA, therefore, is set to 0, indicating unfavorable trends when compared with both its past performance and the industry median.

Operating Cashflow are higher than Netincome?

This criterion ensures that the company's profit is backed by actual cash flow, providing a good indication of its quality.

Historical accruals of Proximus (BX7.F)

In 2023, Proximus reported an Operating Cash Flow of EUR 1,620,000,000 compared to a Net Income of EUR 357,000,000. This difference shows that Proximus has a solid cash basis for its profits, which is a positive sign for investors. Historically, Proximus has consistently generated higher cash flows than net income, which can be seen from their 20-year data with occasional exceptions, indicating sustainable operations and cash inflows. Assigning 1 point to this criterion.

Liquidity of Proximus (BX7.F)

Leverage is declining?

The Change in Leverage criterion compares the current year's leverage ratio to the previous year's. If the current year's leverage is lower, it indicates reduced financial risk and aligns with positive financial health.

Historical leverage of Proximus (BX7.F)

The leverage ratio of Proximus has increased from 0.2727 in 2022 to 0.3155 in 2023. This represents a growth in leverage of approximately 15.7%. Historically, Proximus has fluctuated in leverage over the past two decades, reaching its peak in 2023. An increase in leverage is generally seen as a higher financial risk since it indicates higher debt levels relative to equity. Therefore, the Piotroski score for this criterion would be 0, reflecting a negative trend in financial risk management.

Current Ratio is growing?

The change in Current Ratio is important for evaluating a firm's liquidity and its ability to meet short-term liabilities with short-term assets.

Historical Current Ratio of Proximus (BX7.F)

For Proximus (BX7.F), the Current Ratio has increased from 0.6502 in 2022 to 0.7257 in 2023. This increase indicates an improvement in the company's liquidity over the period. Given the rising trend, Proximus earns 1 point in the Piotroski analysis for this criterion. Looking at the historical trend, the company's ratio has been lower than the industry median over the last two decades. However, the increase is a positive sign as it shows an enhancement in the company's capacity to cover its short-term obligations.

Number of shares not diluted?

Change in shares outstanding is crucial as it indicates whether a company is diluting its shares (usually a bad signal for existing shareholders) or buying them back (generally a good signal).

Historical outstanding shares of Proximus (BX7.F)

When comparing the outstanding shares of Proximus, it's evident that the number of shares increased slightly from 322,552,465 in 2022 to 322,442,197 in 2023. This means the outstanding shares decreased, contributing positively to shareholder value. Trends over the last 20 years show fluctuations with a noticeable decrease from 2003 to 2009, relatively stable shares post-2009, and a recent slight decline. Based on this reduction, this criterion earns a score of 0.

Operating of Proximus (BX7.F)

Cross Margin is growing?

This criterion compares the Gross Margin of Proximus between two consecutive years to observe if there is an improvement in profit on sales revenues after production costs.

Historical gross margin of Proximus (BX7.F)

For Proximus (BX7.F), Gross Margin has increased from 0.6265 in 2022 to 0.6332 in 2023. This represents a slight improvement, earning the company 1 point according to the Piotroski analysis. Historically, Proximus has shown higher Gross Margins than the industry median, which in 2023 is 0.6122. This consistent performance above the industry benchmark illustrates a strong cost management and profitability stance over the past two decades.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It's calculated by dividing sales by average total assets.

Historical asset turnover ratio of Proximus (BX7.F)

Comparing the Asset Turnover ratio for Proximus (BX7.F) in 2023 (0.5525) with that in 2022 (0.5875), we observe a decrease in the ratio. This decline suggests that Proximus has become less efficient in using its assets to generate revenue. Given that a higher Asset Turnover ratio typically indicates better performance, this trend is considered unfavorable. As the ratio has decreased, we assign 0 points for this criterion in the Piotroski analysis. Charting the last 20 years, the peak performance was in 2005 with a ratio of 1.004 and has generally been trending downwards, indicating a long-term decline in asset utilization efficiency.


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