CMTL 3.33 (-5.4%)
US2058262096HardwareCommunication Equipment

Last update on 2024-06-07

Comtech Telecommunications (CMTL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Analyze Comtech Telecommunications' (CMTL) Piotroski F-Score for 2023. Uncover insights into their profitability, liquidity, and operating 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: 4

We're running Comtech Telecommunications (CMTL) 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?
0
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

Comtech Telecommunications (CMTL) was evaluated using the Piotroski F-Score, a 0-9 scale reflecting a company's financial strength. CMTL scored 4 out of 9. Major issues include persistent negative net income and cash flow from operations, increased leverage, more outstanding shares indicating potential dilution, and a decreasing gross margin. Positive pointers are an improved return on assets (ROA), higher operating cash flow relative to net income, a rising current ratio, and improved asset turnover, although these still struggle compared to industry standards. Overall, CMTL’s financial position shows volatility and areas needing enhancement.

Insights for Value Investors Seeking Stable Income

CMTL’s Piotroski score of 4 suggests moderate financial instability and mixed performance. Key concerns include ongoing losses and declining gross margin combined with increased debt. While there are signs of improvement in current ratio and asset efficiency, these improvements are unstable and below industry median benchmarks. Given this mixed performance and potential risks highlighted, it might be wise for investors to approach CMTL with caution, conducting further detailed analysis before making any investment decisions.

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

Profitability of Comtech Telecommunications (CMTL)

Company has a positive net income?

Assess if a company's net income is positive or negative. A positive net income indicates profitability, while a negative net income signals a loss.

Historical Net Income of Comtech Telecommunications (CMTL)

In 2023, Comtech Telecommunications (CMTL) reported a net income of -$26,899,000, marking it as negative. This immediately sets the Piotroski score for net income at 0, as the criterion requires a positive net income. The company has witnessed substantial volatility over the past 20 years, with net income reaching as high as $76,433,000 in 2008, only to plummet to steady losses in recent years, including significant downturns of -$73,480,000 in 2021 and -$33,052,000 in 2022. This downward trend highlights considerable challenges in its profitability metrics.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a measure of the cash generated by the company's regular business operations. It's essential for assessing the financial viability of the company.

Historical Operating Cash Flow of Comtech Telecommunications (CMTL)

The CFO for Comtech Telecommunications (CMTL) in 2023 stands at -$4,433,000, highlighting a negative trend. Historically, the company's CFO has fluctuated between positive and negative values, demonstrating occasional operational challenges. Notably, between 2003 and 2022, Comtech enjoyed several years of robust CFO figures, peaking at $124,520,000 in 2010. However, recent years show increased volatility. Given the negative CFO in 2023, the score for this criterion is set to 0, underscoring concerns about cash generation from its core operations recently.

Return on Assets (ROA) are growing?

Change in ROA measures the company's ability to generate profit relative to its assets. It indicates efficiency in asset utilization.

Historical change in Return on Assets (ROA) of Comtech Telecommunications (CMTL)

The ROA for Comtech Telecommunications (CMTL) in 2023 is -0.0273, compared to -0.0336 in 2022. This shows an improvement, albeit still a negative ROA. Therefore, for this criterion, CMTL scores 1 point. Compared to the industry median ROA which consistently hovered around 0.35 to 0.44 over the last 20 years, CMTL's performance indicates below-par utilization of assets, pointing to potential issues in converting investments into earnings. Despite the progress, it remains crucial for CMTL to improve further to achieve industry averages.

Operating Cashflow are higher than Netincome?

This criterion examines if the operating cash flow is higher than net income, a good indicator of earnings quality. If so, it suggests a capacity to generate cash from operations, which is crucial for financial health.

Historical accruals of Comtech Telecommunications (CMTL)

With an operating cash flow of -$4.43 million and a net income of -$26.9 million in 2023, Comtech Telecommunications (CMTL) scores a favorable 1 point, as operating cash flow is indeed higher than net income. This pattern is positive as it indicates less aggressive accounting practices; the lower net income typically hints at non-cash charges like depreciation, whereas operating cash flow provides a more transparent look at the financial health. Historical data demonstrate fluctuations with erratic trends, yet in critical years of significant loss like 2021 and 2019, operating cash flow had also shown poor performance, suggesting underlying structural weaknesses.

Liquidity of Comtech Telecommunications (CMTL)

Leverage is declining?

Change in Leverage assesses whether a firm has managed to reduce its amount of financial leverage relative to the previous year. This criterion helps investors understand how a company is managing its debt load.

Historical leverage of Comtech Telecommunications (CMTL)

In 2023, Comtech Telecommunications (CMTL) exhibited an increase in leverage from 0.179 in 2022 to 0.2026. This rise indicates a higher debt ratio, which could imply increased financial risk. According to historical data from the past two decades, CMTL's leverage has fluctuated significantly. The current upward trend places leverage at a near-middle position compared to spikes in previous years like 2004 (0.3432) and 2012 (0.2779). Nevertheless, caution should be exercised as increased leverage might elevate the company's vulnerability to economic downturns, and thus, for this criterion, CMTL scores 0 points.

Current Ratio is growing?

The Current Ratio essentially measures a company's ability to pay off its short-term liabilities with its short-term assets. A ratio higher than 1 indicates that the company has more assets than liabilities.

Historical Current Ratio of Comtech Telecommunications (CMTL)

Comtech Telecommunications' Current Ratio has increased from 1.3612 in 2022 to 1.4412 in 2023, showing a slight improvement in its short-term financial health. This is a favorable trend and merits a Piotroski score of 1 under this criterion. However, it is important to note that their Current Ratio of 1.4412 is still significantly below the industry median of 1.8276 for 2023, suggesting room for improvement.

Number of shares not diluted?

The "Change in Shares Outstanding" criterion assesses whether a company has been issuing or buying back its shares. A decrease in outstanding shares is often viewed positively as it indicates management's confidence in the company's value.

Historical outstanding shares of Comtech Telecommunications (CMTL)

The shares outstanding for Comtech Telecommunications (CMTL) have increased from 26,506,000 in 2022 to 28,002,000 in 2023. Unfortunately, this would result in a score of 0 for this particular criterion. This trend can be interpreted as the company possibly raising additional capital through the issuance of new shares. Over the past 20 years, the number of shares outstanding has shown fluctuations with significant increases during certain periods—for instance, from 20,906,000 in 2014 to 23,489,000 in 2017, and a decrease from 32,623,000 in 2011 to 25,991,000 in 2012. The current increase from 2022 to 2023 follows the same pattern of intermittent increases, indicating potential strategic financing efforts.

Operating of Comtech Telecommunications (CMTL)

Cross Margin is growing?

The change in Gross Margin is an indicator of the company's profitability and efficiency in managing its production costs. By comparing Gross Margins over successive periods, stakeholders can evaluate whether the company is improving its cost containment and pricing strategy.

Historical gross margin of Comtech Telecommunications (CMTL)

For Comtech Telecommunications (CMTL), the Gross Margin in 2023 was 0.3354 compared to 0.3699 in 2022. This represents a decrease, and as a result, the score in this criterion would be 0 points. A decreasing Gross Margin may indicate rising costs, pricing pressure, or challenges in maintaining profitability, which are areas of concern for investors. Over the last 20 years, CMTL's Gross Margin has seen fluctuations around a median of approximately 0.39. Additionally, when benchmarking against the industry median of 0.3903 in 2023, CMTL's performance appears lower, suggesting potential areas for operational improvement to align better with industry standards.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency at using its assets to generate sales. It is calculated by dividing sales by total assets. It is essential for understanding how effectively a company is utilizing its assets to produce revenue.

Historical asset turnover ratio of Comtech Telecommunications (CMTL)

Comtech Telecommunications' Asset Turnover increased from 0.4943 in 2022 to 0.5582 in 2023. This signifies an improvement in the company's efficiency in using its assets to generate sales, translating to a Piotroski score increment of 1 point for this criterion. Historical data over the last 20 years show the Asset Turnover peaking at 1.1968 in 2003 but experiencing a general downward trend. The recent uptick in 2023 suggests a positive reversal for the company, although it remains below its historical highs. Consequently, this is a good indicator for investors who are cautious about asset efficiency.


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