CRNT 2.7 (+3.05%)
IL0010851660HardwareCommunication Equipment

Last update on 2024-06-07

Ceragon Networks (CRNT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Ceragon Networks (CRNT) with an impressive Piotroski F-Score of 8/9 in 2023, showcasing financial strength and profitability improvement.

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: 8

We're running Ceragon Networks (CRNT) 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?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Ceragon Networks (CRNT) received a high Piotroski F-Score of 8 out of 9, indicating a strong financial position. In 2023, the company has shown significant improvement across various criteria. Key points include a positive net income of $6.22 million, a positive cash flow from operations of $30.9 million, and improved Return on Assets (ROA) from negative to 0.0212. The Operating Cash Flow is much higher than net income, reinforcing financial stability. While the company's leverage slightly increased, it remains low overall and poses minimal risk. The Current Ratio improved to 1.6392, showcasing better liquidity, and the Gross Margin increased by 9.51%, indicating better production efficiency. However, there were issues with share dilution, and Ceragon's Gross Margin and Current Ratio still trail behind industry standards. Lastly, Asset Turnover improved, suggesting better asset use efficiency.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 8, Ceragon Networks (CRNT) appears to be a reasonably strong investment. The company has made significant progress in profitability, liquidity, and operational efficiency, which are positive indicators for potential investors. However, it is important to note the concerns regarding share dilution and how the company's key financial ratios compare to industry medians. Therefore, while Ceragon Networks shows promise, investors should conduct further research and consider the broader industry context 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 Ceragon Networks (CRNT)

Company has a positive net income?

A positive net income is crucial as it indicates profitability and the ability of a company to generate profit from its business operations.

Historical Net Income of Ceragon Networks (CRNT)

The net income for Ceragon Networks (CRNT) in 2023 is $6,220,000, which is positive. This is significant when considering their historical performance: over the past 20 years, the company has faced several instances of negative net income, such as -$77,220,000 in 2003 and -$53,654,000 in 2011. Recent trends, such as 2022’s -$19,689,000, underscore a substantial improvement in 2023. Therefore, this positive net income not only earns Ceragon Networks one point in the Piotroski analysis but also marks a favorable turn towards consistent profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects a company's ability to generate cash from its core business operations. Positive CFO is a sign of robust operating performance and financial health.

Historical Operating Cash Flow of Ceragon Networks (CRNT)

Ceragon Networks has exhibited a positive Cash Flow from Operations in 2023, amounting to $30.9 million. This positive figure signifies a solid ability to generate cash from its core operations, reflecting robust operating performance and financial health. An examination of historical data reveals a pattern of fluctuating CFO over the past two decades, with significant improvements and setbacks. However, the notable rise to a positive $30.9 million in 2023 marks a substantial achievement compared to negative values in certain preceding years. This positive trend earns Ceragon Networks a full point for this criterion in the Piotroski Score, denoting strong fundamentals in operational cash flow management.

Return on Assets (ROA) are growing?

ROA stands for Return on Assets and measures a company's profitability relative to its total assets. It's calculated by dividing net income by total assets. A rising ROA suggests that a company is getting more efficient at generating profits from its asset base, which is generally a good indicator for investors.

Historical change in Return on Assets (ROA) of Ceragon Networks (CRNT)

In the case of Ceragon Networks (CRNT), the ROA improved from -0.0677 in 2022 to 0.0212 in 2023. This positive change adds 1 point according to the Piotroski Factor criteria for this year. Historically, the company's ROA has been inconsistent, fluctuating significantly over the last 20 years. Notably, negative ROA values were reported in numerous years, including significant downturns such as -0.0677 in 2022 and -0.294 in 2013. Above-average industry median ROA values highlight that while an improvement in 2023 is promising, the company still lags behind the industry norms, where median ROA has been comfortably above 0.35 for the past two decades. The company's long-term ROA trends suggest a persistent struggle with profitability contrasted by periods of turnaround and improvement.

Operating Cashflow are higher than Netincome?

Explain the criterion for Ceragon Networks (CRNT) and why it is important to consider

Historical accruals of Ceragon Networks (CRNT)

The Operating Cash Flow (OCF) for 2023 is $30,887,000, which is significantly higher than the Net Income (NI) of $6,220,000 for the same period. This is a positive trend.

Liquidity of Ceragon Networks (CRNT)

Leverage is declining?

Leverage examines the financial risk posed by the reliance on debt in an organization's capital structure. A lower leverage is generally preferred as it implies lesser financial risk.

Historical leverage of Ceragon Networks (CRNT)

In evaluating Ceragon Networks' leverage from 2022 to 2023, it marginally increased from 0.0456 to 0.0459. This translates to no change in points for this criterion, as an increase in leverage signifies added financial risk. Reviewing the historical 20-year trajectory, leverage fluctuations showcase peaks around 2012 (0.0651) and noticeable lows (0) in the mid-decade, emphasizing some past periods of no debt reliance. Despite the minimal increase, it's prudent to consider the consistency in maintaining relatively low leverage in recent years. However, any increase, no matter how slight, indicates a step towards higher reliance on external debt, warranting attention.

Current Ratio is growing?

The change in Current Ratio.

Historical Current Ratio of Ceragon Networks (CRNT)

The Current Ratio for Ceragon Networks (CRNT) has increased from 1.5865 in 2022 to 1.6392 in 2023. This marks an improvement in liquidity, albeit a slight one. This is a positive trend, and hence, we add 1 point for this criterion. By scrutinizing the last 20 years of data, we can observe the company's Current Ratio has varied significantly, peaking at 3.8289 in 2007, while its lowest point was 1.427 in 2014. Compared to the industry median, Ceragon has consistently trailed, with the industry median at 1.8276 in 2023, higher than Ceragon's 1.6392. Although Ceragon shows an improved liquidity position in 2023, it remains below industry standards.

Number of shares not diluted?

The change in Outstanding Shares evaluates a company's share dilution and its impact on shareholder value.

Historical outstanding shares of Ceragon Networks (CRNT)

Ceragon Networks (CRNT) saw its Outstanding Shares increase from 84,132,982 in 2022 to an undefined number in 2023 (reflected as '0'). This trend is bad as it indicates dilution, harming shareholder value. Over 20 years, shares have not consistently increased.

Operating of Ceragon Networks (CRNT)

Cross Margin is growing?

Compare the Gross Margin of a company from one year to another and determine if it has increased or decreased. Gross Margin is crucial as it indicates the portion of revenue that exceeds the cost of goods sold, reflecting the efficiency of production processes.

Historical gross margin of Ceragon Networks (CRNT)

The Gross Margin of Ceragon Networks (CRNT) has increased from 0.3153 in 2022 to 0.3453 in 2023, resulting in an improvement. This uplift of approximately 9.51% suggests Ceragon Networks has improved its production efficiency, yielding a higher proportion of revenue over its cost of goods sold. Historically, since 2003, Ceragon has had fluctuating Gross Margins, peaking at 0.4129 in 2004 and bottoming out at 0.2275 in 2014. This recent increase thus signals a positive shift for the company. When compared to the industry median Gross Margin of 0.3903 in 2023, Ceragon's Gross Margin, although improved, still trails the industry standard, highlighting room for further improvement.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate sales revenue.

Historical asset turnover ratio of Ceragon Networks (CRNT)

The Asset Turnover ratio for Ceragon Networks has increased from 1.0145 in 2022 to 1.1812 in 2023, which is a positive indicator of improved efficiency. This increase suggests that the company is generating more revenue per unit of asset compared to the previous year. Historically, the Asset Turnover ratio has shown variability, with a significant increase since 2022, reaching one of its higher levels in the 20-year span.


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