Last update on 2024-06-07

Deutsche Wohnen (DWNI.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

In-depth Piotroski F-Score analysis of Deutsche Wohnen (DWNI.DE) for 2023. Learn about profitability, liquidity, and operating efficiency. Final Score: 6/9

Short Analysis - Piotroski Score: 6

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

The Piotroski F-Score is a measure of a company's financial health, ranging from 0 to 9 based on 9 criteria involving profitability, liquidity, and operating efficiency. Deutsche Wohnen (DWNI.DE) scored 6 out of 9. Despite a positive cash flow from operations, increasing current ratio, and better gross margin and asset turnover, the company suffers from negative net income, declining ROA, and increased leverage. This indicates mixed financial performance with both strengths and weaknesses.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, Deutsche Wohnen shows average financial health. The company's consistent positive cash flow and improving operating efficiency are promising, but the significant net losses and rising leverage raise concerns. Potential investors should be cautious and consider these mixed signals, conducting further research before making 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 Deutsche Wohnen (DWNI.DE)

Company has a positive net income?

Net income is a crucial financial metric representing a company's profitability after all expenses have been deducted from revenue.

Net income for Deutsche Wohnen in 2023 stands at -2,697,600,000, which is undeniably negative. Given the Piotroski F-Score criteria, this negative net income results in zero points for this specific metric. Over the last 20 years, net income figures show a historical trend with intermittent periods of losses (e.g., 2008 with -255,905,000 and 2021 with -434,100,000). Significant profits were recorded between 2013 and 2018, peaking in 2018 at 1,833,000,000. The continuous decline, culminating in recent substantial losses, illustrates financial volatility and signals potential concerns for stakeholders regarding profitability trends.

Company has a positive cash flow?

The criterion checks if the company's Cash Flow from Operations (CFO) is positive. A positive CFO indicates that the company is generating enough cash from its core business activities.

Deutsche Wohnen's CFO for 2023 is €384,800,000, which is positive. This earns the company 1 point on the Piotroski scale. Over the past 20 years, there have been fluctuations in CFO, but recent years show a trend of positive cash flows, underscoring consistent and healthy operational performance. For instance, CFO remained positive from 2014 onwards, indicating robust business operations.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's ability to generate profit from its assets. Comparing year-over-year ROA changes helps assess operational efficiency and profitability trends. Increasing ROA is viewed favorably.

Deutsche Wohnen's ROA declined from -0.0134 in 2022 to -0.0919 in 2023. This signals a decrease in the company's profitability and efficiency. Given that the industry median ROA for 2023 was 0.4074, Deutsche Wohnen significantly underperformed, marking a negative trend. Thus, 0 points are assigned based on the Piotroski score criteria.

Operating Cashflow are higher than Netincome?

The Operating Cash Flow to Net Income criterion examines if a company's operating cash flow exceeds its net income. This is crucial for assessing the quality of earnings and cash flow generation efficiency.

For Deutsche Wohnen, the Operating Cash Flow in 2023 was €384.8 million, while Net Income was -€2.6976 billion. This substantial disparity indicates that the Operating Cash Flow far exceeds the Net Income. Notably, the company has exhibited an upward trend in Operating Cash Flow over the past two decades, though with some fluctuations. The persistently positive—and often high—cash flow from operations suggests robust underlying business performance. Conversely, the significant net loss in 2023 signals potential issues with profitability, yet the strong operating cash flow indicates efficient cash generation from core operations. Thus, this criterion scores 1 point for Deutsche Wohnen.

Liquidity of Deutsche Wohnen (DWNI.DE)

Leverage is declining?

Change in leverage is vital for understanding the company’s capital structure and risk. It shows how much debt the company is using to finance its assets.

The leverage increased from 0.2724 in 2022 to 0.3068 in 2023, indicating higher reliance on debt in 2023. Based on Piotroski analysis, this is unfavorable. Historical data shows leverage fluctuating, but this increase signals elevated financial risk. Hence, no points are added for this criterion.

Current Ratio is growing?

Current Ratio refers to the ratio of a company's current assets to its current liabilities. It is an important indicator of a company's short-term liquidity position.

The Current Ratio for Deutsche Wohnen (DWNI.DE) has increased from 2.7745 in 2022 to 3.9314 in 2023, indicating an increase in liquidity. Historically, the company's Current Ratio has fluctuated between 0.191 in 2010 and 3.9314 in 2023. In contrast, the industry median current ratio for 2023 is 3.3155. Therefore, the performance of Deutsche Wohnen in terms of short-term liquidity appears favorable. This improvement is positive for the criterion, earning a point for better liquidity management.

Number of shares not diluted?

Change in Shares Outstanding compares share count over time, indicating potential dilution or buybacks, vital for evaluating shareholder value impacts.

For Deutsche Wohnen (DWNI.DE), the outstanding shares remained constant at 396,934,985 from 2022 to 2023. This constancy in share count receives a score of 0, as no decrease occurred. Analyzing the data: over the past 20 years, changes tended to reflect significant corporate actions—increases point to acquisition fundings or equity financing, while decreases suggest share buybacks or consolidations. The stabilization in the recent period might indicate steadier financial management or fewer capital-intensive activities. Nevertheless, a neutral impact on shareholder value is observed.

Operating of Deutsche Wohnen (DWNI.DE)

Cross Margin is growing?

Gross Margin represents the percentage of revenue that exceeds the cost of goods sold (COGS). By comparing Gross Margin year over year, one can gauge improvements or declines in operational efficiency and profitability.

In 2023, Deutsche Wohnen's Gross Margin stood at 0.3581, up from 0.3017 in 2022. This indicates an improvement in the company's operational efficiency, adding 1 point to the Piotroski score. Historically, Deutsche Wohnen's Gross Margin has fluctuated, with a notable high of 1.0902 in 2006 and a low of 0 in 2008. Comparatively, in 2023, the industry median Gross Margin is 0.4074, suggesting that while Deutsche Wohnen has made improvements, it still lags behind the industry median. This trend, however, is positive as it shows a recovery towards historical averages and an upward trajectory in profitability.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. A higher ratio indicates better performance and is generally favorable for evaluating operational effectiveness.

The Asset Turnover has increased from 0.0268 in 2022 to 0.0362 in 2023, which is a positive sign for Deutsche Wohnen. This increase suggests improved efficiency in utilizing its assets to generate revenue. While the Asset Turnover ratio is still relatively low compared to earlier years, such as 2005 when it was 0.1557, the positive trend in the latest period might indicate the company is making strategic improvements. Overall, this fulfills the criteria for adding 1 point in the Piotroski Analysis.