DD 80.14 (-0.22%)
US26614N1028ChemicalsSpecialty Chemicals

Last update on 2024-06-06

DuPont de Nemours (DD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Comprehensive 2023 Piotroski F-Score analysis of DuPont de Nemours (DD). Assessing profitability, liquidity, and efficiency, DD scores 5 out of 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: 5

We're running DuPont de Nemours (DD) 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?
1

This analysis uses the Piotroski F-Score, a system from 0 to 9 and evaluates companies based on profitability, liquidity, and operating efficiency. DuPont de Nemours (DD) has an F-Score of 5 out of 9. Here’s the breakdown: 1. **Profitability**: For 2023 the net income is positive ($423 million), so is the cash flow from operations ($1.918 billion), and the operating cash flow is higher than the net income—all positives earning 1 point each. However, the change in return on assets dropped significantly, earning them 0 points. 2. **Liquidity**: The company’s leverage increased slightly, and the current ratio decreased, both negative indicators earning 0 points each. However, the company reduced shares outstanding, leading to 1 point. 3. **Operating Efficiency**: Although Asset Turnover Ratio slightly improved, earning them 1 point, the Gross Margin fell a bit, getting them 0 points. In sum, the company's financial position is somewhat mixed with steady cash flow but high asset return and slight growth issues.

Insights for Value Investors Seeking Stable Income

Given a Piotroski F-Score of 5, DuPont de Nemours (DD) showcases moderate strength in finances with a positive cash flow, share buyback, and slight uptick in asset efficiency. However, declining ROA, decreased current ratio, and rising leverage signal some financial risk. If you're cautious and aiming for stronger profitability, it might be worth looking at other stocks. Still, for a balanced portfolio, DD could be a middle-of-the-road option worthy of more detailed look.

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

Profitability of DuPont de Nemours (DD)

Company has a positive net income?

Net income indicates how profitable a company is. Positive net income shows profitability, which is fundamentally important for a company's sustainability.

Historical Net Income of DuPont de Nemours (DD)

For the fiscal year 2023, DuPont de Nemours (DD) has a net income of $423 million, which is positive. This results in adding one point according to the Piotroski F-Score criterion. Despite net income showing a positive trend, comparing it to the historical data of the past 20 years shows that 2023's net income is significantly lower than many previous years. Notably, net income in 2021 was exceptionally high at $6.467 billion. However, profitability has been volatile, evidenced by the negative net income in 2019 (-$2.951 billion). Nonetheless, the positive net income for 2023 still reflects better financial health compared to the negative net income years.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash a company generates from its regular business operations. A positive CFO suggests that the company is able to generate ample cash flow to maintain and grow its operations.

Historical Operating Cash Flow of DuPont de Nemours (DD)

For the year 2023, DuPont de Nemours has a CFO of $1.918 billion, which is positive, adding 1 point according to Piotroski's scoring. Compared to previous years, the CFO indicates a significant recovery from $588 million in 2022, but the value is still lower than most of the pre-2018 levels, showing room for improvement. This upward trend from the previous year is a good sign, but it also raises questions about the sustainability of this rise in CFO given the historical fluctuation.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures the company's efficiency in generating profits from its assets from one year to the next. A higher ROA indicates better asset efficiency.

Historical change in Return on Assets (ROA) of DuPont de Nemours (DD)

For DuPont de Nemours (DD), the ROA dropped significantly from 0.1348 in 2022 to 0.0106 in 2023. This represents a decline of approximately 92%, indicating that the company's efficiency in generating profit from its asset base has substantially worsened. Over the last 20 years, the firm's operating cash flow has exhibited variability, peaking at $8.7 billion in 2017 before descending to $1.9 billion in 2023. Compared to the industry median ROA, which has remained relatively stable around 30%, DuPont de Nemours' performance is considerably below par. Consequently, this indicator scores 0 points, reflecting an unfavorable trend.

Operating Cashflow are higher than Netincome?

The criterion compares Operating Cash Flow to Net Income. It is important as a higher Operating Cash Flow suggests cash generation efficiency.

Historical accruals of DuPont de Nemours (DD)

In 2023, DuPont de Nemours (DD) reported an Operating Cash Flow of $1.918 billion, while its Net Income stood at $423 million. The comparison shows that the Operating Cash Flow is indeed higher than the Net Income. Consequently, DD earns 1 point in this criterion. Assessing the historical data, the fluctuation in Operating Cash Flow compared to Net Income reveals the cash generation and financial stability over time. For instance, in years like 2013 and 2021, the Operating Cash Flow was significantly higher than the Net Income, reflecting strong operational efficiencies and cash reserves, while certain years manifest the challenges faced. More specifically, the last five years present a dynamic shift, revealing stints of robust financial health intermixed with transitional phases. In 2019, Operating Cash Flow was lower compared to the Net Income, demonstrating operational reload. However, the gradual increment in OCF by 2023 reinstates confidence in the company’s monetary management.%durable durability further espoused by accrued profitability.

Liquidity of DuPont de Nemours (DD)

Leverage is declining?

Change in leverage assesses how a company's use of debt relative to equity has changed. A decrease in leverage indicates reduced reliance on debt, lowering financial risk.

Historical leverage of DuPont de Nemours (DD)

For DuPont de Nemours (DD), leverage has increased from 0.188 in 2022 to 0.2008 in 2023, indicating a higher reliance on debt. Examining the last 20 years, DD's leverage peaked in 2015 at 0.3541 and has fluctuated since. The 2023 increase is minor but moves against recent efforts to decrease leverage, making it a negative trend in terms of financial stability. Hence, this criterion scores 0 points.

Current Ratio is growing?

The Current Ratio is a measure of a company's ability to pay its short-term obligations with its short-term assets. A higher ratio indicates greater liquidity.

Historical Current Ratio of DuPont de Nemours (DD)

DuPont de Nemours (DD) posted a Current Ratio of 2.4254 in 2023, down from 3.019 in 2022. This represents a decrease in the company's liquidity position. Analyzing the last 20 years, DD's current ratio has fluctuated but generally stayed above the industry median, which was 1.9399 in 2023. The decline in the Current Ratio indicates a potential reduction in short-term financial stability and thus earns a score of 0 in the Piotroski Analysis.

Number of shares not diluted?

A decrease in outstanding shares can indicate that the company is likely buying back its shares, which can be a sign of a company's financial health.

Historical outstanding shares of DuPont de Nemours (DD)

Comparing the outstanding shares of DuPont de Nemours (DD) from 2022 to 2023 reveals a significant decrease from 498.5 million shares to 449.9 million shares. This 9.8% reduction suggests that the company may be engaging in share buybacks. Historically, the data over the past two decades indicates fluctuations in outstanding shares, peaking in 2018 with 771.8 million shares. Consequently, the decreasing trend in recent years, particularly the drop from 2022 to 2023, earns the company 1 point.

Operating of DuPont de Nemours (DD)

Cross Margin is growing?

Change in Gross Margin compares year-over-year profitability by evaluating production efficiency relative to revenue. An increase signals improving operational effectiveness, factoring in cost management and pricing strategies.

Historical gross margin of DuPont de Nemours (DD)

Comparing the Gross Margin of 0.3508 in 2023 with the Gross Margin of 0.3545 in 2022 for DuPont de Nemours (DD), it is evident that the margin has decreased, not increased. This results in a score of 0 point for this Piotroski criterion. This decline, although marginal, suggests a slight reduction in production efficiency. Looking at the last 20 years, DD has generally maintained a gross margin above the industry median, consistently outperforming the benchmark, especially notable from 2017 onward. The 2023 margin of 0.3508, although down from 2022, still surpasses the industry median of 0.3018, indicating strong relative performance despite the recent dip.

Asset Turnover Ratio is growing?

Asset Turnover shows how efficiently a company utilizes its assets to generate revenue.

Historical asset turnover ratio of DuPont de Nemours (DD)

In 2023, DuPont de Nemours (DD) reported an Asset Turnover of 0.3021, slightly up from 0.299 in 2022. This indicates a marginal increase in the company's efficiency at using its assets to generate revenue. Historically, the company's Asset Turnover has shown varying trends, peaking at 1.2201 in 2008 and experiencing a significant drop to 0.1671 in 2019, followed by a gradual recovery. Given this slight uptick in 2023, we assign 1 point for an increase, signaling a positive, albeit modest, improvement in operational efficiency.


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