CRL 216.19 (+2.52%)
US1598641074Medical Diagnostics & ResearchDiagnostics & Research

Last update on 2024-06-07

Charles River Laboratories (CRL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Charles River Laboratories (CRL) Piotroski F-Score Analysis for 2023: Final Score 6/9. Evaluate CRL's profitability, liquidity, and efficiency using 9 criteria.

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 Charles River Laboratories (CRL) 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?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Charles River Laboratories (CRL) scored 6 out of 9 on the Piotroski F-Score. Key points from the analysis include: - Profitability: CRL has a positive net income of $474.62M in 2023 and a strong cash flow from operations ($683.90M), highlighting financial health. - Efficiency: The Operating Cash Flow is higher than Net Income, a positive indicator; however, the asset turnover ratio decreased. - Liquidity: Improved as seen by the current ratio increase and leverage decrease. - Share dilution: An anomaly as 2023 data states zero shares, indicating a potential error. - Margins: Gross margin slightly decreased. Overall, CRL shows strong profitability and liquidity but faces efficiency challenges.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, Charles River Laboratories (CRL) demonstrates good financial health, with strong profitability and improved liquidity. However, concerns about operational efficiency and the anomaly in share data need further examination. Investors might find CRL worth considering due to its financial stability and cash flow strength, but should be cautious about efficiency and verify share data accuracy.

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

Profitability of Charles River Laboratories (CRL)

Company has a positive net income?

The net income criterion assesses whether the company is profitable, which is crucial for evaluating financial health.

Historical Net Income of Charles River Laboratories (CRL)

The net income for Charles River Laboratories (CRL) in 2023 is $474,624,000, which is a positive figure. Comparing to its historical trends over the last 20 years, CRL has had fluctuations including negative years such as -$521,843,000 in 2008 and -$336,669,000 in 2010. However, it has been strongly positive in recent years, reaching $486,226,000 in 2022 and $474,624,000 in 2023. This positive trend in net income underlines a solid financial standing for CRL, contributing a point to the Piotroski Score for profitability. Overall, the net income trend appears robust with consistent gains in the recent years, highlighting a strong recovery and profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the net cash inflow from operating activities.

Historical Operating Cash Flow of Charles River Laboratories (CRL)

For Charles River Laboratories (CRL), the CFO in 2023 stands at $683.90M, which signifies that the firm's core business operations are generating positive cash flow. Comparing this number with the historical data, CRL has maintained a trend of positive operating cash flow over the past 20 years, having increased considerably from $123.77M in 2003. This strong positive trend in CFO points to a robust operational performance, arguably contributing to enhanced liquidity and operational flexibility. Consequently, this positive CFO criterion adds one point to CRL in the Piotroski scoring model. The historical growth from various low points, particularly maintaining positivity through 2008 and 2020 downturns, displays CRL's resilient business operations.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is a critical measure. If it increases over the period, it indicates improved efficiency in asset use.

Historical change in Return on Assets (ROA) of Charles River Laboratories (CRL)

In 2022, Charles River Laboratories (CRL) had an ROA of 0.0665. In 2023, the ROA declined to 0.0601. As the ROA has decreased over this period, CRL does not score a point on this criterion, setting the score to 0. Considering this historic data, while CRL's ROA saw upward trends in prior years, it has now deviated from that positive growth. It's also important to contrast this with the industry's median ROA, which remains substantially higher indicating, CRL might be underperforming relative to peers. Therefore, this declining trend poses a concern.

Operating Cashflow are higher than Netincome?

Operating Cash Flow is the amount of cash generated by a company's regular business operations. A higher Operating Cash Flow compared to Net Income indicates strong cash generation relative to reported profit, which is a favorable sign for financial health.

Historical accruals of Charles River Laboratories (CRL)

For Charles River Laboratories in 2023, the Operating Cash Flow was $683.90 million, while the Net Income was $474.62 million. As the Operating Cash Flow is higher than the Net Income, we add 1 point for this criterion. The historical data shows a general positive trend in Operating Cash Flow with some fluctuations, which is typical in most companies due to varying business cycles. The overall high cash flow compared to a relatively consistent and growing Net Income suggests CRL has robust operational efficiency and strong financial health.

Liquidity of Charles River Laboratories (CRL)

Leverage is declining?

Change in Leverage is crucial as it signals how much debt a company is using to finance its assets. A reduction typically suggests improved financial health and risk management.

Historical leverage of Charles River Laboratories (CRL)

Charles River Laboratories (CRL) has seen its leverage rise from 0.4074 in 2022 to 0.3742 in 2023. This represents a decrease in the leverage ratio. As leverage has decreased, we add 1 point. Historical data over the last 20 years shows leverage ratios fluctuating, peaking in 2011 at 0.4512 and hitting a low in 2005 at 0.1025. This recent leverage reduction is hence a positive indicator.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term liabilities with short-term assets. A higher ratio indicates better short-term financial health.

Historical Current Ratio of Charles River Laboratories (CRL)

The Current Ratio for Charles River Laboratories (CRL) increased from 1.3183 in 2022 to 1.5247 in 2023. This increase signifies improved short-term liquidity, scoring 1 point on the Piotroski Analysis. Despite CRL's current ratio being below the industry median of 2.3682, the upward trend is a positive signal, reflecting stronger short-term financial stability.

Number of shares not diluted?

Change in Shares Outstanding refers to the change in a company's share count over a period. It shows if the company is issuing more shares or buying them back.

Historical outstanding shares of Charles River Laboratories (CRL)

The Outstanding Shares for Charles River Laboratories in 2023 are reported to be 0, which is a dramatic decrease from the 50,812,000 shares reported in 2022. This is fundamentally an impossible scenario since a public company cannot function with zero outstanding shares. Observing the trend from 2003 to 2022, there was gradual fluctuation, but the overall count remained significant and non-zero. Given this anomaly for 2023, we cannot add a point to the Piotroski Score based on this data. It's essential to investigate further for a possible data input error.

Operating of Charles River Laboratories (CRL)

Cross Margin is growing?

The change in gross margin criterion assesses whether Charles River Laboratories has improved its cost control and pricing power over the past year.

Historical gross margin of Charles River Laboratories (CRL)

Comparing the Gross Margins, Charles River Laboratories (CRL) experienced a decrease from 0.3679 in 2022 to 0.3639 in 2023, hence, failing to increase its Gross Margin. This trend is aligned with a minor reduction of roughly 1.09%, translating to 0 points in this criterion. Historically, while CRL's gross margins exhibit some volatility, they don’t appear vastly out of sync with long-term dynamics, yet remain consistently below the industry's median Gross Margin. For context, the industry median Gross Margin was 0.504 in 2023, showing a stark contrast to CRL's recent figures.

Asset Turnover Ratio is growing?

Change in Asset Turnover provides insight into how efficiently a company is using its assets to generate revenue over a period. An increase signifies better performance.

Historical asset turnover ratio of Charles River Laboratories (CRL)

Reviewing the recent asset turnover ratios for Charles River Laboratories, we note a decrease from 0.5437 in 2022 to 0.5228 in 2023. This change indicates a less efficient use of assets to generate revenue, earning a score of 0 for this Piotroski criterion. Additional historical data of the past 20 years shows a generally declining trend in asset turnover, with some fluctuations. While peaks were observed in earlier years (e.g., 2003 at 0.8178), the recent downward trend may warrant further attention to operational efficiency.


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