CSGS 44.16 (+2.41%)
US1263491094SoftwareSoftware - Infrastructure

Last update on 2024-06-07

CSG Systems (CSGS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Discover CSG Systems' (CSGS) Piotroski F-Score analysis for 2023, with insights on profitability, liquidity, operating efficiency, and financial stability.

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: 7

We're running CSG Systems (CSGS) 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?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score for CSG Systems (CSGS) is a solid 7 out of 9, which is promising. Here’s a breakdown of how they scored in key areas: **Profitability** 1. Positive net income: $66.25M in 2023. 2. Positive cash flow from operations: $131.9M in 2023. 3. Increasing ROA: Grew from 0.0322 to 0.0475 between 2022 and 2023. 4. Operating cash flow greater than net income: Further showcasing healthy cash management. **Liquidity** 1. Decline in leverage: Increased from 0.3179 in 2022 to 0.3946 in 2023 (negative score). 2. Improving current ratio: Went up from 1.4528 in 2022 to 1.5374 in 2023. 3. Share repurchase trend: Reduced outstanding shares from 31,028,000 to 29,938,000. **Operating Efficiency** 1. Decline in gross margin: Slight decrease from 0.4814 to 0.474 (negative score). 2. Increasing asset turnover: Increased from 0.7967 in 2022 to 0.8377 in 2023.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7, CSG Systems shows strong financial health, especially in profitability and liquidity categories. The consistent profitability, positive cash flow, share repurchase, and improving asset efficiency are all good signs. However, the rising leverage and declining gross margin are areas that need monitoring. For investors, CSG Systems appears to be a viable and relatively strong candidate to consider for investment due to its overall financial stability and profitability. Keep an eye on those few red flags, but it seems worth exploring further.

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

Profitability of CSG Systems (CSGS)

Company has a positive net income?

Net income is a measure of the profitability of a company. It’s one of the most important metrics for investors to consider.

Historical Net Income of CSG Systems (CSGS)

The net income for CSG Systems (CSGS) in 2023 is $66,246,000, which is positive. This follows a historical trend of mostly positive figures over the past 20 years, except for two years. The consistent profitability, evident with a relatively stable upward trajectory, is good. Hence, for the Piotroski Analysis, CSG Systems earns 1 point for this criterion.

Company has a positive cash flow?

One of the key metrics in the Piotroski F-score is Cash Flow from Operations (CFO). CFO should be positive, as it indicates that the company is generating more cash than it spends, highlighting robust financial health.

Historical Operating Cash Flow of CSG Systems (CSGS)

For the fiscal year 2023, CSG Systems (CSGS) reported a Cash Flow from Operations (CFO) of $131,896,000. This value is positive, underlining effective cash management and operational efficiency. As per the Piotroski F-score criteria, this trend earns CSGS a full point. The historical data shows fluctuations in CFO over the past two decades, but with a general upward trajectory, despite periodic dips, reaffirms financial resilience. This positive CFO augurs well for CSGS, portraying it as a financially stable entity capable of maintaining liquidity.

Return on Assets (ROA) are growing?

ROA, or return on assets, measures the profitability of a company in relation to its total assets. It's crucial for assessing how efficiently management is using its assets to generate earnings.

Historical change in Return on Assets (ROA) of CSG Systems (CSGS)

In 2023, CSG Systems exhibits an ROA of 0.0475, which reflects an increase when compared to its 2022 ROA of 0.0322. This improvement indicates more effective resource utilization relative to the previous year. Despite a historical fluctuation in trend, the company's current ROA is still significantly lower than the last 20 years of the industry median ROA, which peaks at 0.7671. This disparity underscores a longer-term relative underperformance; yet, the recent incremental gains suggest positive momentum and potential for better alignment with the industry norms. Thus, the company earns 1 point for this criterion.

Operating Cashflow are higher than Netincome?

Operating cash flow is the cash generated by a company's normal business operations. Comparing it to net income can help assess the quality of earnings.

Historical accruals of CSG Systems (CSGS)

For 2023, CSG Systems reports an operating cash flow of $131.9M, while the net income is $66.25M. This difference indicates strong cash generation from actual operations, earning the company 1 point in the Piotroski analysis. Analyzing historical data, we see substantial reforms from past fluctuations with operating cash flow generally exceeding net income. This trend is encouraging, showcasing healthy cash management.

Liquidity of CSG Systems (CSGS)

Leverage is declining?

Change in leverage refers to the variation in the ratio of total debt to total assets, and it can indicate changes in a company's financial strategy or risk profile.

Historical leverage of CSG Systems (CSGS)

The leverage for CSG Systems has increased from 0.3179 in 2022 to 0.3946 in 2023. This rising trend suggests a higher degree of financial risk, as the company has taken on more debt relative to its assets. Over the last 20 years, the leverage ratio had notable fluctuations, with a peak in 2007 at 0.5445 and a low in 2021 at 0.1494. This increase in 2023 might raise concerns about the company's debt management strategy and financial stability. Therefore, according to Piotroski Analysis, this trend is unfavorable, resulting in a score of 0.

Current Ratio is growing?

Assess if the Current Ratio, a liquidity indicator that measures a company’s ability to pay short-term obligations, has improved. An increase signifies better liquidity.

Historical Current Ratio of CSG Systems (CSGS)

In 2023, CSG Systems (CSGS) posted a Current Ratio of 1.5374, which is an increase from the 2022 Current Ratio of 1.4528. This rise, albeit moderate, suggests an enhancement in the company's short-term liquidity position, indicating a better ability to cover its short-term liabilities. Historically, comparison with the industry median over the past 20 years reveals CSG’s Current Ratio generally lags behind the industry. Despite the industry's median being 1.5348 in 2023, CSG Systems' slight edge with 1.5374 is noteworthy. Given the criterion, CSG Systems earns 1 point.

Number of shares not diluted?

The change in shares outstanding assesses if the company has repurchased its shares. Share buybacks reduce the number of shares available and can increase earnings per share.

Historical outstanding shares of CSG Systems (CSGS)

For 2023, CSG Systems' outstanding shares have decreased to 29,938,000 from 31,028,000 in 2022, which results in adding 1 point for this criterion. This is a positive indicator, as it suggests the company might be engaging in share repurchases. Over the past 20 years, the company has steadily decreased its outstanding shares, from 51,432,000 in 2003 to 29,938,000 in 2023, showing a consistent repurchase strategy. This trend underscores a long-term commitment to enhancing shareholder value, a factor that investors might find particularly appealing.

Operating of CSG Systems (CSGS)

Cross Margin is growing?

The Gross Margin change criterion is essential to assess whether a company is managing its production costs effectively relative to its revenue. A rise in gross margin signifies better operational efficiency and profitability.

Historical gross margin of CSG Systems (CSGS)

For CSG Systems (CSGS), the Gross Margin in 2023 stands at 0.474 as opposed to 0.4814 in 2022. This marks a decrease in Gross Margin from the preceding year, warranting a 0 score. This downward trend might ring some alarm bells for investors as it reflects slightly poorer operational efficiency. However, a broader picture shows that CSGS has maintained fairly steady margins compared to its historical values - with the last five years averaging close to the current figure, indicating relative stability. Despite that, CSG Systems lags significantly behind the industry median (0.715 in 2023), suggesting potential areas for improvement in cost management vis-à-vis peers.

Asset Turnover Ratio is growing?

Asset Turnover is calculated by dividing sales by total assets, showing how efficiently a company uses its assets to generate revenue. It's crucial for gauging operational efficiency.

Historical asset turnover ratio of CSG Systems (CSGS)

Comparing CSG Systems' Asset Turnover of 0.8377 in 2023 to 0.7967 in 2022, there's an increase. This upward trend is positive for operational efficiency, suggesting improved asset utilization. Over the last 20 years, CSGS has shown fluctuations but stays consistently efficient, with the 2023 value near historical highs. This trend earns the company 1 point.


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