COP 115.03 (+0.4%)
US20825C1045Oil & GasOil & Gas E&P

Last update on 2024-06-06

ConocoPhillips (COP) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

In-depth Piotroski F-Score analysis of ConocoPhillips (COP) for 2023, highlighting key financial criteria such as liquidity and efficiency, with a final score of 4/9.

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 ConocoPhillips (COP) 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?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score evaluates companies on 9 financial criteria to judge their financial strength. ConocoPhillips (COP) scores a 4 out of 9 according to this model. COP's current net income and operating cash flow are positive, and its operating cash flow is higher than net income. However, the company's return on assets, leverage, and current ratio show some weaknesses. Furthermore, COP has decreased its outstanding shares, but its gross margin and asset turnover ratios have declined, showing inefficiencies in operations. Historical performance also shows fluctuations in these metrics.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 4, ConocoPhillips demonstrates both strengths and weaknesses. The positive net income and cash flow are encouraging, but the declining asset efficiency and leverage increase raise concerns. Investors should closely monitor these financial metrics over time and compare COP’s performance to industry standards. Given the mixed results, COP may be worth considering for investment, but only with caution and further investigation into their operational strategies.

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

Profitability of ConocoPhillips (COP)

Company has a positive net income?

Net income represents the company's profit after all expenses have been deducted from total revenue. It is a key indicator of a company’s profitability.

Historical Net Income of ConocoPhillips (COP)

For ConocoPhillips (COP), the net income in 2023 is $10,957,000,000, which is positive. Historically, COP has witnessed fluctuations in net income, including losses during the financial crisis of 2008 (-$16,998,000,000) and more recent years (2014, 2015, and 2016). The positive net income in 2023 reflects a recovery and a profitable year, which is a good sign for investors. For this criterion in the Piotroski F-Score, COP would earn 1 point.

Company has a positive cash flow?

Operating Cash Flow (CFO) measures the cash generated by a company's regular business operations. Positive CFO indicates healthy operational performance.

Historical Operating Cash Flow of ConocoPhillips (COP)

For 2023, ConocoPhillips reported a CFO of $19.965 billion, indicating robust cash generation from its operations. Notably, comparing to previous years, while 2022 saw an exceptionally high CFO of $28.314 billion, the 2023 figure is still significantly strong, highlighting sustained operational efficiency. Over the past 20 years, COP's CFO has largely remained positive, with only slight dips in years of lower oil prices or economic downturns. This trend underscores COP's resilience in maintaining positive cash flow.

Return on Assets (ROA) are growing?

This criterion evaluates whether the Return on Assets (ROA) has increased in the current year compared to the previous year, which is an indicator of improved profitability and efficiency in asset utilization.

Historical change in Return on Assets (ROA) of ConocoPhillips (COP)

For ConocoPhillips (COP), the Return on Assets (ROA) decreased from 0.2025 in 2022 to 0.1155 in 2023. This decline indicates that the company was less efficient in generating profit from its assets in 2023 compared to the previous year. Historically, it's worth noting that COP's ROA has fluctuated over the past two decades, showing significant peaks and troughs influenced by various market and operational factors. When compared to the industry median ROA, which saw figures like 0.4978 in 2023, COP's performance is below the industry standard. This downward trend in ROA is concerning and adds to the pressure to improve asset utilization and profitability moving forward. Thus, according to the Piotroski criterion, COP scores 0 in this category.

Operating Cashflow are higher than Netincome?

The criterion looks at whether operating cash flow is greater than net income. This metric is crucial for evaluating a company's cash-generating efficiency. High operating cash flow relative to net income indicates robust earnings quality since less of the income is tied up in non-cash items.

Historical accruals of ConocoPhillips (COP)

In 2023, ConocoPhillips (COP) exhibited an Operating Cash Flow of $19.965 billion compared to a Net Income of $10.957 billion. This yields a positive discrepancy, signifying that the firm generates substantial cash flow relative to its net earnings. Historically, ConocoPhillips has experienced oscillations in its operating cash flow, peaking at $28.314 billion in 2022 and demonstrating remarkable resilience through boom-and-bust cycles. Comparing these figures over the last two decades reveals an ability to generate liquidity even in challenging periods such as 2009 ($4.403 billion) and 2020 ($4.802 billion). Overall, this positive trend is good as it underscores earnings quality and financial soundness. Thus, 1 point is added for this criterion.

Liquidity of ConocoPhillips (COP)

Leverage is declining?

Change in Leverage reflects the company's changing use of debt to meet its financial obligations, which affects financial risk.

Historical leverage of ConocoPhillips (COP)

In 2023, ConocoPhillips' leverage increased to 0.1862 from 0.1729 in 2022. Despite leverage fluctuating over the last 20 years, the recent rise from 0.1729 to 0.1862 marks an increase. Notably, comparing figures from 2021 at 0.2066, COP has slightly reduced its leverage since then - suggesting a mixed trend. However, the specific increase from 2022 to 2023 implies a marginally higher financial risk, thus scoring 0 points on this criterion.

Current Ratio is growing?

The Current Ratio measures a company's capacity to pay short-term obligations and is essential for assessing liquidity and financial health.

Historical Current Ratio of ConocoPhillips (COP)

The Current Ratio for ConocoPhillips (COP) slightly decreased from 1.4594 in 2022 to 1.4323 in 2023. This trend indicates a minor decline in the company's liquidity position. Analyzing the historical data of the past 20 years, COP's current ratio has generally increased over the years, reaching a peak of 2.4014 in 2019 before stabilizing around the industry median levels. Compared to the industry median current ratio of 1.1065 in 2023, COP’s ratio remains higher, signifying a relatively stronger liquidity position. Given the requirement to mark 1 point for an increase, COP gets 0 points due to the slight decrease. While the decline is minimal, it suggests the need for monitoring but does not incite immediate concern due to the company's generally strong liquidity.

Number of shares not diluted?

Change in shares outstanding measures if the company has been repurchasing its own stock or issuing new shares. Repurchasing is often viewed positively as it indicates the company is generating enough profit to buy back shares.

Historical outstanding shares of ConocoPhillips (COP)

The outstanding shares for ConocoPhillips decreased from 1,274,028,000 in 2022 to 1,202,757,000 in 2023, resulting in the allocation of 1 point. This is viewed positively as it indicates that the company is likely profitable enough to repurchase shares, benefiting existing shareholders by potentially increasing earnings per share. Chart data shows this is part of a broader trend in the last decade, maintaining mostly a trajectory of decreasing outstanding shares, further supporting their capital management strategy.

Operating of ConocoPhillips (COP)

Cross Margin is growing?

Gross Margin measures the percentage of revenue that exceeds the company's cost of goods sold. It is a crucial indicator of operational efficiency and profitability.

Historical gross margin of ConocoPhillips (COP)

In 2023, ConocoPhillips reported a Gross Margin of 0.3242, compared to 0.3824 in 2022. This indicates that the Gross Margin has decreased from the previous year, resulting in a downward trend. Additionally, when we compare this with the industry median in 2023, which stands at 0.4978, ConocoPhillips is underperforming relative to its peers. This consistent underperformance calls into question the company's competitive positioning and internal cost management strategies. Over a 20-year horizon, the Gross Margin has shown volatility but appears significantly lower than the industry median in recent years, hinting at structural challenges.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. It is calculated by dividing sales by total assets.

Historical asset turnover ratio of ConocoPhillips (COP)

Comparing the Asset Turnover of 0.5917 in 2023 with 0.8509 in 2022, we observe a decrease. In 2022, ConocoPhillips had a significantly higher turnover, showcasing better efficiency in using its assets to generate revenue. However, the ratio dropped to 0.5917 in 2023. Studying data from the past 20 years, we notice fluctuations in the ratio, peaking at 1.8349 in 2005 and hitting the lowest at 0.2531 in 2016. The declining trend is a concern, indicating reduced efficiency; hence, zero points are awarded. This demands an analysis of both internal operations and external market conditions impacting asset utilization efficiency.


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