Last update on 2024-06-07

Eutelsat Communications (E3B.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

In-depth Piotroski F-Score analysis for Eutelsat Communications (E3B.F) in 2023, revealing a financial score of 5/9. Discover profitability and liquidity insights.

Short Analysis - Piotroski Score: 5

We're running Eutelsat Communications (E3B.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score helps measure a company's financial strength on a 0 to 9 scale using profitability, liquidity, and operating efficiency. Eutelsat Communications (E3B.F) scored a 5 out of 9. Here's a brief summary of the results: 1. Profitability: The company has a positive net income (€314.9 million) and cash flow from operations (€734.9 million), with an increasing Return on Assets (ROA). Operating cash flow has remained consistently higher than net income, indicating strong earnings quality. 2. Liquidity: The current ratio has risen, suggesting improved capacity to meet short-term obligations, but leverage has slightly increased, indicating more reliance on debt. 3. Operating Efficiency: Despite a historically strong gross margin, this year saw a small decline. The asset turnover ratio also saw a slight decrease, reflecting minor inefficiency in asset use. Additionally, the number of shares has increased, implying potential dilution of existing shareholders' value.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 5, Eutelsat Communications (E3B.F) shows moderate financial health with strengths in profitability and liquidity but minor concerns around leverage and operational efficiency. If you prioritize stable profitability and cash flow, this stock is worth looking into further. However, be cautious about the slight increase in debt and shares, which may affect shareholder value over time.

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

Profitability of Eutelsat Communications (E3B.F)

Company has a positive net income?

The net income measure is an important criterion because it tells us if the company is profitable over a specific period, impacting overall financial health and investor confidence.

Eutelsat Communications (E3B.F) has a net income of €314.9 million for 2023. This is positive and thus adds 1 point in the Piotroski Analysis score. Looking at the historical data over the past 20 years, there has been a generally positive trend with only one negative year (-€7.3 million in 2005). The recent years have an average net income around €300 million, indicating stable profitability. This positive net income in 2023 reaffirms the company's ability to remain profitable, which is favorable for this criterion. Therefore, this trend is good for the company's overall health and points toward continued investor confidence.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents cash generated from core business operations.

In 2023, Eutelsat Communications (E3B.F) reported a CFO of €734.9 million. This positive cash flow is crucial as it indicates the company's ability to generate sufficient cash to maintain operations without relying on outside funding. Historically, over the last 20 years, Eutelsat's CFO has remained consistently positive, with peaks in 2015 and 2017 at over €1 billion. This trend of consistent positive cash flow underscores robust operational efficiency. Given the positive CFO in 2023, Eutelsat scores 1 point for this criterion in the Piotroski Analysis.

Return on Assets (ROA) are growing?

Change in Return On Assets (ROA) measures a company's ability to improve asset efficiency in generating profits. It's vital as it indicates operational profitability.

The ROA for Eutelsat Communications (E3B.F) increased from 0.0311 in 2022 to 0.042 in 2023. This improvement assigns the company 1 point for this criterion. The positive trend in ROA is favorable, showing enhanced profit-generating efficiency using the company's assets. Over the past two decades, Eutelsat's ROA has shown variability, but the recent 2023 figure marks a stable, albeit modest, improvement in asset utilization. Additionally, when comparing this to the industry median ROA trends, while Eutelsat's figures are lower, the positive change signals better future potential.

Operating Cashflow are higher than Netincome?

The Operating Cash Flow should be higher than Net Income to assess the quality of the firm's earnings by confirming that a company generates enough cash to support its earnings.

The Operating Cash Flow of €734.9 million in 2023 significantly exceeds the Net Income of €314.9 million. Such a disparity suggests that Eutelsat Communications is effectively generating cash from operational activities, which supports its earnings quality. The trend is good, as it indicates the company is able to cover its obligations and potentially reinvest in growth avenues without relying heavily on financing. Consistently higher operating cash flow than net income over these years enhances the confidence in the sustainability of future profits.

Liquidity of Eutelsat Communications (E3B.F)

Leverage is declining?

Change in Leverage measures the difference in a company's leverage from one year to the next. This assessment is crucial because a decrease in leverage indicates that a company is reducing its reliance on debt, which generally suggests better financial health and risk management. Conversely, an increase in leverage could signal higher risk and potential financial instability.

A comparison of Eutelsat Communications' leverage shows an increase from 0.4072 in 2022 to 0.4202 in 2023. This 0.013 increase in leverage suggests that Eutelsat Communications has slightly increased its reliance on debt. Historically, over the last 20 years, the company's leverage ratios have fluctuated significantly, peaking at 0.751 in 2005 and reaching its lowest point at 0.046 in 2003. The recent increase is relatively minor but still reflects a trend towards higher debt levels for the year 2023. This trend is unfavorable for the Piotroski score and results in no additional point for 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 its current assets. It indicates financial health by showing how well a company can cover its short-term liabilities with its short-term assets.

Eutelsat Communications' current ratio has increased from 1.0466 in 2022 to 1.6621 in 2023, garnering 1 point in the Piotroski Analysis. This improvement suggests better liquidity and capability to cover short-term obligations. Despite being lower than the industry median of 1.8276 in 2023, this rise must be seen positively. In the past 20 years, Eutelsat's current ratio mostly lagged behind the industry median, highlighting ongoing liquidity challenges, although it improved considerably from 2022 to 2023.

Number of shares not diluted?

The change in shares outstanding reflects the number of shares a company has in the hands of its shareholders. This is an important metric for determining ownership and potential dilution of shareholder value. Typically, an increase suggests potential dilution, whereas a decrease might signal stock buybacks or consolidation, which can be positive for shareholders.

The outstanding shares of Eutelsat Communications increased from 230,322,045 in 2022 to 248,570,264 in 2023. This increase of 18,248,219 shares suggests potential dilution of existing shareholders' value, as there are now more shares among which the profits are divided. Over the long term, it is crucial to note that the number of outstanding shares has grown from 0 in 2003 to 248,570,264 in 2023, showing a consistent increase over the last 20 years. Therefore, according to the Piotroski Analysis criteria, this metric would be assigned a score of 0 since outstanding shares increased.

Operating of Eutelsat Communications (E3B.F)

Cross Margin is growing?

Gross margin measures the percentage of total sales revenue that the company retains after incurring the direct costs associated with producing goods and services. A higher gross margin indicates efficiency in controlling production costs and profitability.

For Eutelsat Communications (E3B.F), the gross margin in 2023 was 0.9087 compared to 0.9191 in 2022. This reveals a slight decrease in the gross margin year-over-year, resulting in 0 points according to the Piotroski score methodology. Historically, the gross margin has experienced minor fluctuations but maintained a strong position well above the industry median of 0.3903 in 2023. Such resilience suggests strong operational efficiency. The recent dip could be attributed to increasing production costs or price adjustments. Despite the decrease, Eutelsat's gross margin remains robust, signaling proficient cost management and stable profitability within the industry norms.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate sales revenue; higher values indicate better utilization.

Eutelsat Communications' Asset Turnover ratio slightly decreased from 0.1551 in 2022 to 0.151 in 2023. This indicates a minor decline in the efficiency with which the company is using its assets to generate revenue. This reduction is minor and may not by itself signal a significant issue but could be a point of concern when considered with other financial metrics.