DTE 116.6 (-0.52%)
US2333311072Utilities - RegulatedUtilities - Regulated Electric

Last update on 2024-06-06

DTE Energy (DTE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

In-depth Piotroski F-Score analysis for DTE Energy (DTE) in 2023. Final F-Score: 6/9, analyzing profitability, liquidity, 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.
Learn more...

Short Analysis - Piotroski Score: 6

We're running DTE Energy (DTE) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a method of evaluating the financial health of a company by giving it a score between 0 and 9 based on nine criteria related to profitability, liquidity, and operating efficiency. A score closer to 9 indicates a stronger financial position. DTE Energy has received a Piotroski F-Score of 6, indicating a relatively strong but not perfect financial position. Here's how DTE Energy fares on different criteria: 1. Profitability: The company has a positive net income ($1.4 billion) and positive cash flow from operations ($3.22 billion). The Return on Assets (ROA) has risen from 2022 to 2023. Additionally, their operating cash flow is higher than net income, which is a good sign of cash management. 2. Liquidity: DTE Energy is facing some challenges here. While leverage has declined slightly, the current ratio has declined from 0.808 to 0.6016, indicating weakening short-term liquidity. The number of outstanding shares has also increased from 195 million to 206 million, which might dilute the shareholders' value. 3. Operating Efficiency: DTE Energy shows mixed results. Gross Margin increased to 0.3395 from 0.1908, but the asset turnover ratio decreased from 0.4667 to 0.2915 which indicates reduced operational efficiency. To sum up, DTE Energy is showing strong profitability and some areas of improved efficiency but faces challenges in liquidity and operational efficiency.

Insights for Value Investors Seeking Stable Income

Given the Piotroski F-Score of 6, DTE Energy (DTE) appears to be a reasonably strong stock with good profitability and cash flow management. However, there are concerns related to short-term liquidity and efficiency in turning assets into revenue. As an investor, it would be wise to keep these factors in mind. If you're looking for a stable investment with excellent profitability and are okay with some liquidity risks, DTE Energy could still be a good option to consider. Nonetheless, it might also be helpful to compare it against industry peers before making any investment decisions.

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

Profitability of DTE Energy (DTE)

Company has a positive net income?

Net income is a crucial indicator of a company's profitability. A positive net income suggests the company is generating profit after all expenses are accounted for.

Historical Net Income of DTE Energy (DTE)

DTE Energy's net income for 2023 stands at $1,397,000,000, which is indeed positive. In a broader context, analyzing the net income trend over the past 20 years, it's noteworthy that DTE Energy has consistently reported a positive net income each year. This consistent profitability underscores DTE Energy’s robust financial health and its ability to effectively manage expenses while generating substantial revenue. In 2023, the net income not only continues this positive streak but also marks a record high in the provided 20-year period. Clearly, the trend is positive and reflects well-managed operations and profitable growth. Therefore, under the Piotroski Analysis, DTE Energy earns 1 point for maintaining a positive net income.

Company has a positive cash flow?

The criterion examines whether a company's Cash Flow from Operations (CFO) is positive. A positive CFO indicates good operational income, signifying robust cash generation capacity which is critical for meeting obligations and funding growth.

Historical Operating Cash Flow of DTE Energy (DTE)

DTE Energy's (DTE) CFO for 2023 is $3,220,000,000, which is clearly positive. Over the last 20 years, DTE Energy has consistently shown positive operational cash flow, with an increasing trend, especially peaking at $3,697,000,000 in 2020. The substantial figure in 2023, reflecting a strong cash-generating capability, aligns well with its historical performance, making this a positive sign for the company. Hence, this year's positive CFO contributes 1 point to its Piotroski F-Score, corroborating a robust cash flow position for DTE Energy.

Return on Assets (ROA) are growing?

ROA stands for Return on Assets. It measures the profitability of a company relative to its total assets. This metric is important as it provides insights into how effectively a company is using its assets to generate profit.

Historical change in Return on Assets (ROA) of DTE Energy (DTE)

Comparing DTE Energy's ROA of 0.032 in 2023 with a ROA of 0.0263 in 2022, we observe an increase. This rise signifies improved profitability relative to the company's asset base. Specifically, the ROA rose by approximately 0.0057 points, indicating a heightened efficiency in asset utilization. Historically, while the industry's median ROA was significantly higher, DTE's focused strategies have yielded an upward trend in recent years. Therefore, this trend is considered favorable, and thus, we award 1 point for this positive change in ROA.

Operating Cashflow are higher than Netincome?

This criterion assesses how effectively a company is converting its net income into cash. High cash flow relative to net income signifies strong cash management.

Historical accruals of DTE Energy (DTE)

For DTE Energy in 2023, the Operating Cash Flow stands at $3.22 billion, while Net Income is reported as $1.397 billion. Evidently, the Operating Cash Flow significantly surpasses the Net Income, which demonstrates efficient cash conversion and robust cash flow management. Hence, for this criterion, the company earns a point (1). Analyzing historical data reveals a consistent performance: DTE has often maintained higher Operating Cash Flow compared to Net Income. For instance, in 2020, the company recorded an Operating Cash Flow of around $3.697 billion against a Net Income of about $1.368 billion. Maintaining this trend highlights the company's ability to generate cash to meet its obligations, invest in growth, and potentially return value to shareholders. Overall, this indicates a positive and stable cash flow situation for DTE Energy, reinforcing its financial health.

Liquidity of DTE Energy (DTE)

Leverage is declining?

Change in leverage examines whether the company's financial leverage has increased or decreased over a given period.

Historical leverage of DTE Energy (DTE)

In 2022, DTE Energy had a leverage of 0.3969, which increased to 0.3916 in 2023. This is indicative of a financial trend where leverage has increased. Over the past 20 years, the highest leverage was observed in 2020 at 0.4195, while the lowest was in 2011 at 0.2658, showing some volatility in DTE Energy's financial strategy regarding debt usage.

Current Ratio is growing?

The Current Ratio is a measure of a company's short-term liquidity and its ability to meet short-term obligations.

Historical Current Ratio of DTE Energy (DTE)

For DTE Energy, the Current Ratio decreased from 0.808 in 2022 to 0.6016 in 2023, signaling a decline in short-term liquidity. This decreasing trend indicates a diminished capability to cover short-term liabilities. Specifically, the decreasing Current Ratio means that for every dollar of short-term liabilities, DTE Energy's short-term assets have decreased from $0.808 to $0.6016. Historically, the company's 20-year Current Ratio trend shows fluctuations with the highest ratio observed in 2010 at 1.2161 and recent downward trends creating a point of concern. Relative to the industry median, which registers at 0.7878 in 2023, DTE Energy's ratio is notably weaker, suggesting comparatively less liquidity. Based on this analysis, DTE Energy does not meet the criterion for an improved Current Ratio.

Number of shares not diluted?

This criterion evaluates whether the number of outstanding shares has decreased. A decrease would suggest prudence in management decisions, preserving shareholder value.

Historical outstanding shares of DTE Energy (DTE)

Upon comparing the Outstanding Shares, we see an increase from 195,000,000 in 2022 to 206,000,000 in 2023. This increase results in a score of 0 for this criterion. Historically, DTE Energy's outstanding shares have shown a generally increasing trend over the last 20 years, with a significant jump from 2022 to 2023. Share issuance can indicate capital raising efforts but could also dilute existing shareholders' value if not adequately justified by growth opportunities.

Operating of DTE Energy (DTE)

Cross Margin is growing?

Gross Margin is the ratio of gross profit to revenue, indicating how efficiently a company produces goods relative to its revenue.

Historical gross margin of DTE Energy (DTE)

The Gross Margin for DTE Energy in 2023 was 0.3395 compared to 0.1908 in 2022. This marks an improvement, signifying better production efficiency. Over the past 20 years, the highest Gross Margin was 0.7179 in 2004, while the lowest was 0.1908 in 2022, showing fluctuations. Despite the increase in recent years, the 2023 Gross Margin of 0.3395 still falls below the industry median of 0.4109, indicating room for improvement against peers. This improvement adds 1 point for this criterion, reflecting a positive trend.

Asset Turnover Ratio is growing?

The change in asset turnover is assessed by comparing current and previous years’ ratios. Effective asset utilization is key for operational efficiency.

Historical asset turnover ratio of DTE Energy (DTE)

For DTE Energy (DTE), the Asset Turnover Ratio in 2023 is 0.2915, down from 0.4667 in 2022. This decline indicates a decrease in the company’s efficiency in generating revenue from its asset base. A lower asset turnover ratio can signal potential performance or operational inefficiencies; thus, adding 0 points for this criteria is appropriate. Analyzing historical data demonstrates that this ratio fluctuated significantly over the past two decades, peaking in 2014 at 0.4564, and struggling during crisis years like in 2009 and more recently in 2020. However, the 2023 downturn raises concerns given the stark drop from the preceding year’s ratio.


Obligatory risk notice

We would like to point out that the contents of this website are for general information purposes only and do not constitute recommendations for the purchase or sale of specific financial instruments, and therefore do not constitute investment advice. In particular, marketstorylabs.com and its creators cannot assess the extent to which information / recommendations made on the pages correspond to your investment objectives, your risk tolerance and your ability to bear losses. Therefore, if you make any investment decisions based on information on the site, you do so solely on your own responsibility and at your own risk. This in turn means that neither marketstorylabs.com nor its creators are liable for any losses incurred as a result of investment decisions based on the information on the marketstorylabs.com website or other media used.