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Last update on 2024-06-07

Charter Communications (CHTR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Get an in-depth Piotroski F-Score analysis of Charter Communications (CHTR) for 2023. Evaluate financial health and stability with our comprehensive report.

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: 5

We're running Charter Communications (CHTR) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

We tested Charter Communications (CHTR) using the Piotroski 9-criteria scoring system to see if it's a good stock to invest in. The score helps show if a company is financially strong and undervalued. CHTR scored 5 out of 9. Here’s how they did: They scored well (1 point each) for having positive net income, positive cash flow from operations, higher operating cash flow than net income, declining leverage, and decreasing number of outstanding shares. However, they scored 0 in four areas: the current ratio (indicating potential liquidity issues), return on assets (which worsened), gross margin (which slightly decreased), and asset turnover ratio (which slightly declined).

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-score of 5 out of 9, Charter Communications shows some strengths, but also areas needing improvement. It may not be the strongest investment if you are looking for a company that's doing well across all areas. They've been profitable and have good cash flow, but they also have some concerns with liquidity and efficiency in using their assets. It wouldn't hurt to dig deeper or consider other stocks that might have a better overall financial health score if you want more security in your investment.

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

Profitability of Charter Communications (CHTR)

Company has a positive net income?

NET INCOME: Whether the net income is positive or negative for Charter Communications (CHTR) for the specified period. It's important because positive net income usually signifies profitability.

Historical Net Income of Charter Communications (CHTR)

For Charter Communications (CHTR), the net income for 2023 is $4,557,000,000. This positive net income marks a continuation of the company's profitable trend over recent years. A closer look at the past two decades reveals a dynamic evolution of earnings: the company struggled with negative net income for the most part of the early 2000s, reaching a loss of -$4,341,000,000 in 2004. However, since 2013, Charter's net income began improving significantly, recording positive figures each year from 2013 onwards—culminating in the stable profitability seen in 2023. Therefore, for the Piotroski criterion of net income, Charter Communications earns 1 point.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash inflow and outflow from a company's core business activities. A positive CFO is a strong indicator of a firm's operational strength.

Historical Operating Cash Flow of Charter Communications (CHTR)

As per the data provided, Charter Communications (CHTR) reported a CFO of $14,433,000,000 in 2023, which is indeed positive. This continues a trend of positive cash flow from operations over the past 20 years, illustrating the company's solid operational performance. For example, in 2003, the CFO was only $765 million, indicating significant growth and an increasing ability to generate cash more efficiently over time. Such consistently positive CFO over two decades underscores the financial stability and good health of Charter Communications. Hence, for this Piotroski criterion, the company earns a full 1 point.

Return on Assets (ROA) are growing?

Change in ROA is an important factor as it indicates the company's ability to generate profit from its assets. An increase implies better efficiency.

Historical change in Return on Assets (ROA) of Charter Communications (CHTR)

The ROA for Charter Communications (CHTR) decreased from 0.0352 in 2022 to 0.0312 in 2023. This decline suggests that the company's efficiency in using its assets to generate profits has worsened. Thus, the score for this criterion is set to 0. Specifically, the industry's median ROA over the same period shows values ranging from 0.4033 to 0.3886, far outperforming Charter's ROA. This indicates a need for Charter to reassess its asset utilization strategies.

Operating Cashflow are higher than Netincome?

This criterion assesses whether a company converts its earnings into cash flow efficiently.

Historical accruals of Charter Communications (CHTR)

For Charter Communications (CHTR) in 2023, the Operating Cash Flow was $14,433 million, significantly higher than the Net Income of $4,557 million. This results in a score of 1 for this criterion. Analyzing historical data demonstrates a consistent trend of high operating cash flow relative to net income, barring some fluctuations. This indicates robust operational efficiency and effective cash conversion. Notably, in 2009, net income surged unusually to $11,366 million, significantly surpassing operating cash flow, an anomaly likely due to non-operational factors. Post-2009, operating cash flow has consistently remained strong, underscoring Charter's resilient financial position and cash generation capability.

Liquidity of Charter Communications (CHTR)

Leverage is declining?

Change in Leverage is a criteria for the Piotroski Analysis that evaluates a company's debt level over time, an important indicator of financial risk and stability.

Historical leverage of Charter Communications (CHTR)

Comparing the leverage of 0.6649 in 2022 with 0.6507 in 2023, Charter Communications (CHTR) has seen a decrease in its leverage ratio. This is a positive change, as it signifies that the company has reduced its debt relative to its equity, lowering financial risk. With leverage trending down from 0.8728 in 2003 and reaching a lower level in 2023, this is indicative of effective management of debt over the long term. Consequently, we add 1 point for this criterion.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets. It is crucial for gauging financial health and operational efficiency.

Historical Current Ratio of Charter Communications (CHTR)

Between 2022 and 2023, Charter Communications’ Current Ratio decreased from 0.3329 to 0.3127. This 6% decline indicates a slight deterioration in the firm's ability to cover its short-term liabilities with short-term assets, suggesting potential liquidity issues. Historically, Charter Communications' Current Ratio has been significantly below the industry median, which was 1.0522 in 2023. A healthier ratio is generally above 1, indicative of better short-term financial health. This trend is negative, earning Charter Communications a score of 0 for this criterion.

Number of shares not diluted?

Describe the trend in Outstanding Shares for Charter Communications (CHTR) and its importance.

Historical outstanding shares of Charter Communications (CHTR)

In 2023, Charter Communications had 149,208,188 outstanding shares compared to 161,501,355 in 2022, marking a decrease. This results in adding 1 point. Over the last 20 years, CHTR's outstanding shares have fluctuated. Especially notable is the significant reduction from 332,963,157 in 2007 to 103,000,000 in 2009, followed by subsequent fluctuations. A decrease in outstanding shares often indicates the company is buying back shares, which can be a positive signal to investors as it demonstrates confidence in the firm's future and may result in an increase in earnings per share (EPS).

Operating of Charter Communications (CHTR)

Cross Margin is growing?

Change in Gross Margin: This criterion compares the evolution of the company's gross margin from one year to another. A higher gross margin indicates better cost control relative to revenue, which is crucial for profitability.

Historical gross margin of Charter Communications (CHTR)

Comparing Charter Communications' gross margin of 0.4552 in 2023 to the gross margin of 0.4578 in 2022, there is a slight decrease. This downward trend, although minor, will not earn Charter Communications a point under the Piotroski Analysis. Given the provided historical data, Charter Communications' gross margin has seen fluctuations over the last 20 years with a notable drop around 2012 before stabilizing and rising again from 2016 onwards. Moreover, the company's gross margin is still higher than the industry's median gross margin of 0.4033 in 2023, suggesting better-than-average cost efficiency within the sector despite the recent yearly decline.

Asset Turnover Ratio is growing?

The Change in Asset Turnover criterion measures the company's efficiency in using its assets to generate sales by comparing the asset turnover ratios between two periods.

Historical asset turnover ratio of Charter Communications (CHTR)

The Asset Turnover Ratio for Charter Communications (CHTR) has decreased slightly from 0.3764 in 2022 to 0.3744 in 2023, resulting in a decline of 0.52%. This indicates that the company has become marginally less efficient in utilizing its assets to generate revenue compared to the previous year. Since the Asset Turnover has decreased, no point is awarded based on this criterion. Over a 20-year span, the asset turnover shows some fluctuations but generally has trended upward until recently, with significant improvements from 2003 to 2013, a dip around 2015-2017, and some recovery post-2018.


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