Last update on 2024-06-07

Delivery Hero (DHER.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analysis of Delivery Hero (DHER.DE) using Piotroski F-Score in 2023, scoring 5/9. Detailed look at profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 5

We're running Delivery Hero (DHER.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score evaluates a company’s financial strength on nine criteria: profitability, liquidity, and operating efficiency, scoring between 0-9. Delivery Hero's score is 5 out of 9. Despite some financial challenges, there are areas of improvement: 1. Profitability: Negative net income (-€2,297.5M) and negative cash flow from operations; however, return on assets improved slightly. 2. Liquidity: The company's leverage increased and the current ratio worsened, indicating higher financial risk. 3. Efficiency: Increased gross margin and better asset turnover show improved operational efficiency. The number of shares rose due to restructuring activities.

Insights for Value Investors Seeking Stable Income

The Piotroski F-Score indicates moderate financial health for Delivery Hero. Positive trends in asset efficiency and manageable levels of debt offer some encouragement. However, significant net losses and negative operating cash flow signal caution. Investors should be cautious and consider the company’s long-term turnaround strategy before making decisions. Investing may be risky until consistent positive net income and cash flows are achieved. Further research into recent restructuring efforts and market positioning is advisable before making an investment decision.

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

Profitability of Delivery Hero (DHER.DE)

Company has a positive net income?

Net income is a crucial measure of a company's profitability, indicating how well it tanslates revenue into profits.

The net income for Delivery Hero in 2023 stands at a negative -2,297,500,000. Given the Piotroski criteria, a negative net income results in zero points. This negative trend is consistent with the façade presented by the New York Stock Exchange Committee data over the last decade. For instance, despite certain fluctuations, the company reported a rare moment of positive income in 2019 with a net income of 231.4 million, yet has since plunged back into significant losses. The figures for 2022 (-3,008,400,000) and 2021 (-2,975,000,000) further accentuate this downward trend. This ongoing pattern of substantial negative net income suggests deeper, structural financial challenges within the company, highlighting an urgent need for strategic reassessment.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses the cash inflows and outflows from a company’s core operations, crucial for evaluating its ability to generate cash.

In 2023, Delivery Hero’s CFO stood at a negative €19,500,000, indicating that the company continued to spend more on its operations than it generated in cash. Relative to previous years, this amount evidences a significant improvement compared to negative CFO figures exceeding hundreds of millions in earlier years, such as -€688,800,000 in 2022 and -€901,400,000 in 2021. However, given that positive CFO is a stringent criterion in Piotroski’s analysis, this negative figure means this criterion does not earn Delivery Hero any points, highlighting the ongoing cash flow challenges the company faces. Overall trend shows a progressive improvement, yet it remains under pressure, showing that strategic shifts might still be in transitional phase.

Return on Assets (ROA) are growing?

This criterion examines the change in Return on Assets (ROA) from one year to the next. It is important as it reflects the company’s efficiency in generating profits from its assets.

Delivery Hero's ROA improved from -0.2358 in 2022 to -0.1968 in 2023, indicating a reduction in negative returns and suggesting better asset utilization. This trend is positive; hence, we add 1 point for this criterion. However, it is crucial to note that the company still operates at a loss compared to the industry median ROA, which remains positive at around 0.3592 for 2023. Delivery Hero's efficiency, thus, is still significantly below industry standards, which indicates that while incremental improvements are encouraging, they are yet to place the company on a competitive footing.

Operating Cashflow are higher than Netincome?

This criterion assesses whether the company's operating business is generating cash, which is crucial for sustaining operations and growth. Operating cash flow being higher than net income can signal high-quality earnings.

For Delivery Hero in 2023, the operating cash flow was -19,500,000, which, while still negative, was comparatively better than the net income of -2,297,500,000. This earns Delivery Hero 1 point in the Piotroski F-Score. Over the last decade, Delivery Hero has demonstrated a trend of reducing operating cash flow losses—from -220,500,000 in 2013 to -19,500,000 in 2023. While it's still not in the positive zone, the substantial narrowing of this gap is a positive sign. This trend, coupled with the corresponding net income trends, suggests the company is improving its ability to convert operating activities into cash, a necessary step toward financial health, even though considerable work remains.

Liquidity of Delivery Hero (DHER.DE)

Leverage is declining?

Change in leverage is the criterion that assesses the company's use of debt relative to its equity. Lower leverage implies better financial health and less risk for the company.

For Delivery Hero (DHER.DE), the leverage increased from 0.4321 in 2022 to 0.4993 in 2023, indicating a higher reliance on debt. An increasing leverage ratio signifies that the company's debt levels are growing relative to its equity, which generally points to elevated financial risk. Over the past decade, the company's leverage varied considerably, with noticeable increases in 2020 and 2023. This trend reflects fluctuating financial strategies, often correlated with market conditions and internal investment decisions. The present increase to 0.4993 is notable and viewed negatively in the Piotroski analysis framework, thereby earning zero points on this criterion.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with short-term assets. A higher ratio indicates more liquidity.

In 2023, Delivery Hero's current ratio is 0.9627, down from 1.4689 in 2022, indicating a significant decrease in liquidity. This is concerning, showing a shorter runway for meeting liabilities. Comparing this to the industry's median current ratio of 1.6449 for 2023, Delivery Hero underperforms significantly, suggesting potential difficulty in covering short-term debts compared to its peers. Therefore, the score here would be 0, signifying worse liquidity position.

Number of shares not diluted?

The change in shares outstanding evaluates if a company has issued new shares or repurchased existing ones. This impacts shareholder value.

For Delivery Hero, the number of shares outstanding saw a significant drop from 266,766,000 in 2022 to 0 in 2023. This represents a 100% decrease. Ideally, a decrease in outstanding shares (usually through share buybacks) is considered a good sign, as it suggests the company is returning value to its shareholders. However, in this case, the peculiar result of 0 shares might indicate significant corporate restructuring, delisting, or data inconsistency. Therefore, for the Piotroski score, we would ideally add 1 point, signaling a decrease in shares is good, but the nature of this drastic decrease raises flags for a deeper analysis.

Operating of Delivery Hero (DHER.DE)

Cross Margin is growing?

Gross margin measures a company's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Companies aim for a higher gross margin because it indicates they can cover operational costs while maintaining profitability.

Delivery Hero's gross margin has increased from 0.2602 in 2022 to 0.299 in 2023, which is a positive trend. The company's gross margin improvement of 0.0388 demonstrates better cost management and operational efficiency. Compared to the industry median gross margin, which is 0.3592 in 2023, Delivery Hero is still lagging but gaining ground. It's worth noting that in the past decade, Delivery Hero's gross margin had significant variability, peaking at 0.8235 in 2015 before a steep decline. The recent upward trend, however, reflects potential recovery and optimization efforts. Consequently, Delivery Hero scores 1 point for improved gross margin in 2023.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate sales. An increase often indicates improved efficiency.

Delivery Hero (DHER.DE) has seen an increase in its Asset Turnover ratio from 0.6723 in 2022 to 0.8516 in 2023. This rise signals an improvement in the company's capacity to use its assets efficiently to generate revenue, marking a positive development. Reviewing historical data over the past decade, it's evident that this improvement continues a general upward trend observed since 2014, when the Asset Turnover ratio was 0.2795. Such sustained increases highlight progressively enhanced operational efficiency.