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Last update on 2024-06-04

Deutsche Boerse (DB1.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Deutsche Boerse (DB1.DE) achieved a Piotroski F-Score of 7/9 in 2023, indicating strong financial health and operational 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: 7

We're running Deutsche Boerse (DB1.DE) 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?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a system between 0 to 9 that shows how strong a company's financial position is by looking at 9 different criteria concerning profitability, liquidity, and efficiency. For Deutsche Boerse (DB1.DE), it received a score of 7, which is pretty solid according to this model. To get the score, we looked at data like how their net income and cash flow from operations are positive, and these showed good trends. While some aspects such as Return on Assets and leverage need improvement, many other criteria like liquidity (current ratio) and gross margin are strengthening.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 7, Deutsche Boerse (DB1.DE) seems to be a strong and undervalued investment. It's maintaining good profitability and showing positive trends in areas like cash flow and efficiency. While there are some areas like leverage and Return on Assets where the company falls short compared to industry standards, the overall strong trends make it worth considering for further investment research.

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

Profitability of Deutsche Boerse (DB1.DE)

Company has a positive net income?

The criterion examines if the company's net income for the most recent fiscal year is positive.

Historical Net Income of Deutsche Boerse (DB1.DE)

For Deutsche Boerse (DB1.DE), the net income for 2023 is €1,724 million, which is positive. This is a notably positive trend, reflecting an increasing pattern over the recent years, particularly compared to €1,494 million in 2022 and €1,210 million in 2021. Historically, the company has maintained a positive net income for the past two decades, indicating robust profitability and solid operational performance. Hence, for this criterion, Deutsche Boerse scores 1 point.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion checks if a company's operating cash flow is positive. It is important to consider because it indicates the company's ability to generate cash from its regular business operations, which is crucial for sustainable growth.

Historical Operating Cash Flow of Deutsche Boerse (DB1.DE)

For Deutsche Boerse (DB1.DE), the CFO in 2023 is reported to be €2,549,000,000, which is positive. Over the past 20 years, Deutsche Boerse has consistently generated positive operating cash flow, with recent years showing a significant upward trend. For instance, the CFO was €1,412,000,000 in 2020, €2,483,600,000 in 2022, and further increased to €2,549,000,000 in 2023. This positive trend earns the company 1 point in the Piotroski score and indicates robust financial health and operational efficiency.

Return on Assets (ROA) are growing?

ROA measures how efficiently a company uses its assets to generate profit. Higher ROA indicates better asset efficiency.

Historical change in Return on Assets (ROA) of Deutsche Boerse (DB1.DE)

Deutsche Boerse AG's ROA increased from 0.0061 in 2022 to 0.0068 in 2023, resulting in a score of 1 point for this criterion. Despite this increase, it's important to note that the industry's median ROA for 2023 stands at 0.6043, which is significantly higher than Deutsche Boerse's 0.0068. This suggests that although the company has improved its asset efficiency year-over-year, it still lags considerably behind the industry average. The last two decades of operating cash flow data reflect periods of volatility, yet there has been substantial growth from figures like 530.6 million in 2003 to 2,549 million in 2023. Thus, while the upward trend in ROA is a positive indicator for the company, it must continue to enhance its asset efficiency to be more competitive within the industry.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income analyzes whether a company is able to generate more cash from its operations than the profit it declares. This criterion is vital for assessing earnings quality and ensuring the sustainability of cash flows.

Historical accruals of Deutsche Boerse (DB1.DE)

For Deutsche Boerse (DB1.DE), the operating cash flow in 2023 is €2,549 million, while the net income is €1,724 million. Thus, the operating cash flow is significantly higher than the net income, indicating strong earnings quality and robust cash flow generation capabilities. This trend is positive, resulting in an additional 1 point according to the Piotroski Analysis. Historical data also shows consistency in this trend, especially in recent years, which further strengthens the argument for Deutsche Boerse’s effective cash management and earnings quality. For instance, in 2022, the operating cash flow was €2,483.6 million compared to a net income of €1,494.4 million.

Liquidity of Deutsche Boerse (DB1.DE)

Leverage is declining?

Change in leverage examines the difference in debt levels a company has over a period. A decrease is considered favorable as it indicates a company is reducing its dependency on external financing.

Historical leverage of Deutsche Boerse (DB1.DE)

The leverage ratio for Deutsche Boerse has increased from 0.0169 in 2022 to 0.0315 in 2023. This increase in leverage is not a positive sign as it indicates the company is relying more on debt. Over the last 20 years, the leverage ratio has generally been low but has shown fluctuations. For example, in 2013 it was 0.008, followed by an increase to 0.0141 by 2015, stabilizing around 0.0141 to 0.0196 from 2016 to 2020, before climbing to its highest level of 0.0315 in 2023. This trend shows a recent reliance on higher levels of debt which may pose risks.

Current Ratio is growing?

Explain the criterion for Deutsche Boerse (DB1.DE) and why it is important to consider

Historical Current Ratio of Deutsche Boerse (DB1.DE)

The change in the Current Ratio for Deutsche Börse from 1.0101 in 2022 to 1.0137 in 2023 denotes a slight increase. The Current Ratio is a measure of liquidity, representing the company's ability to meet its short-term obligations with its short-term assets. This upward trend indicates that the financial liquidity position of Deutsche Börse has improved, albeit marginally. Over the last 20 years, the company has seen fluctuations in its Current Ratio, with some years below the 1.0 mark, indicating liquidity challenges at those times. However, relative stability above 1.0 in more recent years suggests a general improvement in liquidity management. Comparatively, the industry's median Current Ratio for 2023 is 1.0148, slightly higher than Deutsche Borse's. This can serve as a reference point; however, industry comparisons should take into account different operational realities. In summary, the upright trend confirms that the company's liquidity is strong, adding a point to the Piotroski Score for this criterion.

Number of shares not diluted?

The criterion examines changes in shares outstanding to gauge the company's shareholder equity financing activities. An increase may dilute share value.

Historical outstanding shares of Deutsche Boerse (DB1.DE)

The Outstanding Shares increased from 183,630,715 in 2022 to 184,298,877 in 2023, indicating a rise of about 0.36%. Historically, the number of outstanding shares has fluctuated, showing trends of both increases and decreases. Notable increases occurred in years 2005 and 2007, hugely influenced by financial actions taken by Deutsche Boerse. This year’s slight increase suggests minor dilution, which is not favorable for shareholders as it could potentially dilute share value. Hence, for this criterion, Deutsche Boerse scores 0 points. Over a 20-year period, the trend indicates careful management of equity financing strategies despite sporadic increases.

Operating of Deutsche Boerse (DB1.DE)

Cross Margin is growing?

Gross Margin essentially indicates how well a company is managing its production costs relative to its revenue. This is important because it affects overall profitability and operational efficiency.

Historical gross margin of Deutsche Boerse (DB1.DE)

From the data provided, Deutsche Börse's Gross Margin increased from 0.5732 in 2022 to 0.5917 in 2023. This signifies an improvement in efficiency or cost management. A higher gross margin typically begets stronger profitability, as a larger portion of revenue is retained after covering the cost of goods sold (COGS). Comparing against the industry median, the 2023 gross margin of Deutsche Börse stands at 0.5917 whereas the industry median is 0.6043. While Deutsche Börse's gross margin trailed the industry median in the earlier years, the recent upswing shows a promising trend of the company catching up. Therefore, for 2023, since Gross Margin increased, 1 point is added.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate revenue. It is significant as it reflects the productivity and operational efficiency of the company.

Historical asset turnover ratio of Deutsche Boerse (DB1.DE)

The Asset Turnover for Deutsche Boerse has increased from 0.0212 in 2022 to 0.0241 in 2023. This trend is favorable as it indicates that the company has become more efficient in utilizing its assets to generate revenue. Over the last 20 years, the Asset Turnover ratio peaked at 0.2067 in 2003 but has generally been lower in the following years, fluctuating yet showing gradual improvement since 2012 from 0.0101 to the current 0.0241. Assigning 1 point for this criterion as it reflects a positive trend.


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