DEZ.DE 5.64 (+1.99%)
DE0006305006Industrial ProductsSpecialty Industrial Machinery

Last update on 2024-06-07

Deutz (DEZ.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Deutz (DEZ.DE) Piotroski F-Score Analysis (2023): See how Deutz scored 6 out of 9 on profitability, liquidity, and operational efficiency indicators.

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 Deutz (DEZ.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?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

Deutz scored 6 out of 9 on the Piotroski F-Score, which measures the financial strength of a company. The company showed strengths in profitability, with positive net income and operating cash flow. Its liquidity was good, evidenced by improving current ratio. However, leverage increased and shares outstanding also went up, which are concerning factors. Deutz’s Return on Assets and Asset Turnover both declined, indicating areas where the company could improve its operational efficiency.

Insights for Value Investors Seeking Stable Income

Given the mixed results, Deutz may be worth further investigation but with caution. A Piotroski F-Score of 6 is above average, suggesting that Deutz is financially stable but not top-tier. Investors could look more closely into the company's efforts to improve profitability and asset utilization while being mindful of the increasing leverage and shares outstanding.

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

Profitability of Deutz (DEZ.DE)

Company has a positive net income?

Net income represents the company's total profit or loss after all expenses and taxes have been subtracted from total revenues. It is crucial as it indicates the company's profitability.

Historical Net Income of Deutz (DEZ.DE)

In 2023, Deutz (DEZ.DE) reported a net income of €81.9 million. This is a positive net income, adding 1 point for this Piotroski criterion. Over the past 20 years, the net income for Deutz has shown considerable fluctuations. Notably, losses were observed in several years, including 2020 with a net loss of €107.6 million and 2009 with a significant net loss of €124 million. However, recent trends show an improvement, with positive net incomes in 2021 (€38.2 million) and 2022 (€80.2 million), culminating in the highest net income in 2023. This resurgence highlights effective cost management and a probable increase in revenues, which should be interpreted as a positive trend for the company's profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects a company's ability to generate sufficient positive cash flow to maintain and grow its operations.

Historical Operating Cash Flow of Deutz (DEZ.DE)

In 2023, Deutz (DEZ.DE) reported a Cash Flow from Operations (CFO) of €138.8 million. This figure is positive, which is a critical indicator of the company's healthy liquidity and capacity to support ongoing operations. Evaluating the trend: over the past 20 years, Deutz has primarily exhibited positive CFO figures, with occasional downturns like 2007 (-€8.7 million) and in 2019 and 2020 which were notably lower than average. Despite these anomalies, maintaining a positive CFO in 2023 amid previous fluctuations signals a resilient fiscal strategy. Hence, Deutz earns the full one-point for this criterion.

Return on Assets (ROA) are growing?

Measure of a company's profitability relative to its total assets.

Historical change in Return on Assets (ROA) of Deutz (DEZ.DE)

In 2023, Deutz's Return on Assets (ROA) was 0.0534, compared to 0.058 in 2022. This marks a decline, not an increase, indicating reduced operational efficiency with respect to asset utilization. The industry median ROA is significantly higher, having remained above 0.31 over the last two decades, highlighting Deutz's underperformance. Thus, the score for this criterion remains at 0, signaling a negative trend.

Operating Cashflow are higher than Netincome?

The criterion assesses whether operating cash flow is higher than net income, indicating efficient cash generation and earnings quality. This is crucial for evaluating financial health.

Historical accruals of Deutz (DEZ.DE)

For Deutz (DEZ.DE), the operating cash flow for 2023 stands at €138.8 million while net income is €81.9 million, demonstrating a stronger cash flow relative to earnings. This indicates a robust ability to generate cash and supports the solidity of the earnings. Historically, Deutz's fluctuating cash flow compared with inconsistent net income affirms a predominantly cash-generative capacity, further bolstering the positive trend observed. Adding 1 point for this criterion reflects improved financial wellness and reliability of cash-based earnings over accrual accounting measures, particularly important for establishing investor confidence.

Liquidity of Deutz (DEZ.DE)

Leverage is declining?

Change in leverage is the ratio of total debt to total assets and indicates a company's financial risk.

Historical leverage of Deutz (DEZ.DE)

The leverage ratio for Deutz (DEZ.DE) increased from 0.0414 in 2023 compared to 0.0523 in 2022. In the context of the Piotroski score, this is a negative signal as higher leverage indicates increased financial risk and potential financial distress. Over the last 20 years, Deutz's leverage has seen fluctuations, yet the recent rise in 2023 from the previous year is a setback in the trend of decreasing leverage.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets. A higher Current Ratio is generally a sign of financial health.

Historical Current Ratio of Deutz (DEZ.DE)

For Deutz (DEZ.DE), the Current Ratio has increased from 1.2199 in 2022 to 1.3282 in 2023. This marks an improvement, indicating that the company is in a better position to cover its short-term liabilities with its current assets. Given these figures, we add 1 point under this criterion. Additionally, the 20-year trend indicates fluctuations, but the current rise is a positive shift. However, it is worth noting that Deutz's current ratio is still below the industry median of 1.7757, as of 2023.

Number of shares not diluted?

The change in shares outstanding criterion assesses whether the company has decreased its number of shares outstanding. A decrease typically implies that the company is buying back shares, which is a positive signal as it suggests confidence in the company's future by management and potentially boosts the stock price.

Historical outstanding shares of Deutz (DEZ.DE)

In the case of Deutz (DEZ.DE), the outstanding shares increased from 120,862,000 in 2022 to 124,902,000 in 2023. This indicates an increase of 4,040,000 shares over the period. Therefore, no point is added for this criterion as the outstanding shares did not decrease. Evaluating the additional data over the past 20 years shows that Deutz has not consistently decreased its outstanding shares but rather has increased them several times, with the most recent increase being in 2023. This may not necessarily be a negative signal on its own but does not adhere to the Piotroski principle of rewarding share buy-backs.

Operating of Deutz (DEZ.DE)

Cross Margin is growing?

Change in Gross Margin is important as it indicates the company’s financial health by showing how efficiently it is producing its goods.

Historical gross margin of Deutz (DEZ.DE)

The Gross Margin for Deutz (DEZ.DE) has increased from 0.1943 in 2022 to 0.2166 in 2023, registering an improvement. This increase is favorable as it reflects higher profitability and efficiency in production. Over the last 20 years, Deutz has seen fluctuations in its Gross Margin, with notable highs in the early 2000s but a dip between 2012 to 2020. As of 2023, Deutz's Gross Margin is closer to the industry median of 0.3492, suggesting a potential narrowing of the gap in operational efficiency. Given this positive trend, 1 point is added for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets in generating sales revenue—higher ratios indicate better efficiency.

Historical asset turnover ratio of Deutz (DEZ.DE)

Comparing the Asset Turnover for Deutz AG, we observe a slight decrease from 1.3684 in 2022 to 1.346 in 2023. Therefore, the Asset Turnover has decreased, and no point is awarded in the Piotroski F-Score for this criterion. This trend might indicate that the company has not improved in using its assets more efficiently to generate revenue this year compared to last year. Given the company's historical data over the past 20 years, we see fluctuations in asset turnover ratios, with notable valleys in 2008, 2009, and 2020 and peaks in 2011 and 2022. This slight decrease should be a point of concern and might suggest the need for reviewing asset utilization and operational efficiency strategies.


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