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Last update on 2024-06-07

Century Aluminum (CENX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Comprehensive Piotroski F-Score analysis of Century Aluminum (CENX) for 2023. Discover key financial metrics and score details highlighting company performance.

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: 4

We're running Century Aluminum (CENX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
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?
0

The Piotroski F-Score is a measure of a company's financial health, ranging from 0 to 9. Century Aluminum (CENX) has achieved a Piotroski Score of 4 out of 9, based on an analysis of profitability, liquidity, and operating efficiency. Key findings include a negative net income for 2023 (-$43.1 million), fluctuating cash flow from operations (CFO), declining Return on Assets (ROA), and an increasing number of outstanding shares. CENX has shown strong operating cash flow and gross margin improvements but exhibits weaknesses in current ratio and asset turnover ratio.

Insights for Value Investors Seeking Stable Income

Century Aluminum (CENX) scores 4 on the Piotroski F-Score, indicating a mixed financial health scenario. While the strong operating cash flow and improving gross margin are positive, negative net income, declining ROA, and increasing share dilution are red flags. Investors may consider this stock cautiously, acknowledging the company's potential for improvement but also its financial instability. Further investigation and a diversified portfolio strategy are recommended before investing in CENX.

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

Profitability of Century Aluminum (CENX)

Company has a positive net income?

Net income signifies the profitability of a company for a given period and impacts investors' interest and stock prices.

Historical Net Income of Century Aluminum (CENX)

For Century Aluminum (CENX), the net income for 2023 is -$43.1 million. A negative net income implies that CENX is not profitable during this fiscal year, reflecting a challenging financial situation or operational inefficiencies. This does not add any points to the Piotroski Score. Over the last 20 years, Century Aluminum's net income has shown considerable volatility, oscillating between profits and losses. Such instability could signal underlying issues in the company’s ability to maintain consistent profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the total amount of money generated by a company’s core business operations. It is an important indicator of financial health.

Historical Operating Cash Flow of Century Aluminum (CENX)

Century Aluminum (CENX) reported a CFO of $105.6 million in 2023. This positive CFO reflects well on the company's core operating efficiency and ability to generate cash from its primary activities. Historically, Century Aluminum has shown varied CFO figures, with significant negative cash flows in years like 2007 and 2008, but also substantial positive cash flows in other years. In 2023, the positive CFO adds to the company's financial robustness, indicating a strong operational performance and efficient management. Thus, 1 point is added for this criterion.

Return on Assets (ROA) are growing?

Change in ROA measures the company's ability to improve its profitability relative to its assets. It is crucial to consider, as a deteriorating ROA signals MIS-governance.

Historical change in Return on Assets (ROA) of Century Aluminum (CENX)

The Return on Assets (ROA) for Century Aluminum in 2022 was -0.0093, which deteriorated further to -0.026 in 2023. This decline in ROA is concerning, indicating declining efficiency in utilizing assets to generate profits. Over the past 20 years, Century Aluminum's ROA has shown volatility, consistent with challenges often faced in the aluminum industry. The industry's median ROA in 2023 was 0.0981, highlighting the underperformance of Century Aluminum compared to its peers. Hence, for the Change in ROA criterion, Century Aluminum scores 0 points.

Operating Cashflow are higher than Netincome?

This criterion measures if a company is generating enough operational cash compared to its net income, suggesting healthier underlying operations.

Historical accruals of Century Aluminum (CENX)

In 2023, Century Aluminum (CENX) reported an Operating Cash Flow of $105.6M and a Net Income of -$43.1M. Since Operating Cash Flow exceeds Net Income, this earns a score of 1 point. This trend is positive, as it indicates that the company is generating more cash from its core operations compared to what is reflected in its earnings. A historical review reveals some significant fluctuations, e.g., high Operating Cash Flow in 2006 ($185.4M) versus very low or negative figures in 2008 (-$665.4M) and 2015 (-$69.1M). Likewise, Net Income varied drastically, notably with -$898.3M in 2008. These variances underscore the cyclical and potentially volatile nature of this industry. Accruals have largely followed a positive trend, further confirming operational robustness in non-recession years.

Liquidity of Century Aluminum (CENX)

Leverage is declining?

Change in leverage measures the company's reduction in debt, reflecting financial health and risk management.

Historical leverage of Century Aluminum (CENX)

In 2023, Century Aluminum's (CENX) leverage increased from 0.2592 in 2022 to 0.2334, indicating an improvement. Historically, the company's leverage ratios have fluctuated notably but never rose beyond 0.415 in the last 20 years. Such a reduction point towards a stronger balance sheet with lower debt obligations in comparison to its equity, a trend Poritoski would favor with an additional 1 point, thereby marking it as a positive development for investors considering leverage metrics.

Current Ratio is growing?

The Current Ratio represents a company's ability to cover its short-term liabilities with its short-term assets. Higher ratios imply better liquidity.

Historical Current Ratio of Century Aluminum (CENX)

Century Aluminum (CENX) has experienced a decrease in its Current Ratio from 1.6504 in 2022 to 1.0054 in 2023. This significant drop indicates a weakened ability to cover short-term liabilities with its current assets, which can be seen as a negative trend. The company's current ratio is now below the industry median of 1.5347 for 2023, raising concerns about its short-term financial stability. Accordingly, for the Piotroski score, this criterion would be rated as 0 points.

Number of shares not diluted?

Change in shares outstanding measures whether a company has issued new shares or bought back existing ones.

Historical outstanding shares of Century Aluminum (CENX)

From 2022 to 2023, the outstanding shares of Century Aluminum (CENX) increased from 91,400,000 to 92,400,000. This 1.1% increase in shares results in a score of 0 for this criterion. An increase in outstanding shares can indicate equity dilution, which may adversely affect existing shareholders by decreasing their ownership percentage. Over the last 20 years, the trend has mostly showcased an increase, doubling from 2003 levels. While some fluctuations are evident, the primary trajectory is upward.

Operating of Century Aluminum (CENX)

Cross Margin is growing?

Gross Margin reflects the proportion of revenue left over after deducting the cost of goods sold. It illustrates the efficiency of a company.

Historical gross margin of Century Aluminum (CENX)

Comparing the Gross Margin of 0.0421 in 2023 to the Gross Margin of 0.0168 in 2022, it is evident that Century Aluminum's Gross Margin increased. This increment awards the company 1 point according to the criterion. This augmentation signifies improved operational efficiency, although, with a Gross Margin of 0.0421 in 2023, Century Aluminum still falls short compared to the industry median of 0.0981. Looking at the historical trend, the Gross Margin peaked in 2006 at 0.2236 and touched a significant low in 2009 at -0.073. Despite the improvement, the current margin signifies there is ample room for enhancement to meet industry standards.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in generating revenue from its assets.

Historical asset turnover ratio of Century Aluminum (CENX)

The Asset Turnover ratio for Century Aluminum (CENX) decreased from 1.826 in 2022 to 1.3171 in 2023. A decrease in Asset Turnover indicates that Century Aluminum has become less efficient in utilizing its assets to generate revenue. This is evident in the historical context where the company had an increasing trend from 2016 to 2022 but experienced a significant drop in 2023. Hence, for the Piotroski F-Score, Century Aluminum scores 0 for this criterion.


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