Last update on 2024-06-04

Elia Group (E4S.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Piotroski F-Score analysis of Elia Group (E4S.F) for 2023 shows a score of 4/9, indicating mixed financial health based on profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 4

We're running Elia Group (E4S.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a measure from 0 to 9 that helps investors evaluate how strong a company's financial position is. Elia Group (E4S.F) received a score of 4 out of 9 based on various financial factors in 2023. While they showed a positive net income and improved their gross margin and asset turnover ratio, they struggled with negative cash flow, a decrease in return on assets, increased leverage, a declining current ratio, and inconsistencies in share information. Overall, their performance was mixed, reflecting some strengths but also significant weaknesses.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Elia Group (E4S.F) has a Piotroski F-Score of 4, which suggests it is not among the strongest candidates for investment. The company has shown some positive signs such as profitability and improved efficiency but also faces serious concerns with liquidity, cash flow, and increasing financial risk. If you are looking for a solid and reliable investment, you might want to explore other stocks with higher scores and more stable financial indicators.

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

Profitability of Elia Group (E4S.F)

Company has a positive net income?

Net income is the company's total profit, reflecting its financial performance. Positive net income indicates profitability, while a negative net income shows a loss.

Elia Group's net income for the year 2023 stands at €355.4 million, indicating a positive outcome. Over the last 20 years, the company has shown increasing net income with a few fluctuations. From €106.3 million in 2003 to €355.4 million in 2023, the trend exhibits consistent growth and significant peaks, for instance in 2010 and 2022 with net income above €400 million and €361 million, respectively. Overall, this demonstrates robust financial health, giving Elia Group a point in this Piotroski Analysis criterion.

Company has a positive cash flow?

Cash Flow from Operations analyzes the cash a company generates from its regular business operations. It excludes external revenue such as investments or acquisitions.

Elia Group's Cash Flow from Operations (CFO) in 2023 is reported at -1,509,400,000, indicating a negative cash flow from core business activities. This negative trend implies that Elia Group is struggling to convert its operations into cash, which is a crucial measure of financial health. Analyzing the historical data, the company has shown fluctuations in its cash flow over the past 20 years. For example, the CFO was positive in 2021 (+3,953,300,000) and 2022 (+1,431,200,000), highlighting inconsistent cash flow. Such variability can be problematic for maintaining operational stability and could deter potential investors. Consequently, for this Piotroski criterion, Elia Group receives a score of 0.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA): Compare the ROA for the current year with the preceding year to assess trends in profitability. A higher ROA indicates better asset efficiency in generating profits.

The ROA for Elia Group in 2023 was 0.0178, compared to 0.0186 in 2022. This decline in ROA reflects a slight decrease in profitability relative to the company's assets. Although a 0.0008 (or -4.3%) drop may seem small, it suggests that the company was marginally less efficient in converting its assets into net profit. When seen in the context of the last 20 years, where Elia Group's operating cash flow has shown significant fluctuations and an industry median ROA that generally hovers around much higher figures, this decrease emphasizes the company's struggle to maintain stable profitability. Thus, in the Piotroski analysis, this criterion scores 0 points because the ROA did not increase.

Operating Cashflow are higher than Netincome?

The criterion that the Operating Cash Flow (OCF) should be higher than Net Income (NI) is pivotal. OCF being higher signifies that the company is generating more cash than what it reports as income, indicating a robust ability to turn sales into actual cash.

For the fiscal year 2023, Elia Group (E4S.F) reported an Operating Cash Flow of -1,509,400,000 and a Net Income of 355,400,000. Here, the Operating Cash Flow is significantly lower than the Net Income. This results in a score of 0 for this criterion. Historically, Elia Group's OCF does show fluctuations but hasn't demonstrated a consistent pattern outperforming NI. This discrepancy in 2023 is startlingly high. Therefore, from a Piotroski standpoint, the trend is unfavorable and warrants closer inspection, possibly indicating inefficiencies or financial management issues for that period.

Liquidity of Elia Group (E4S.F)

Leverage is declining?

Criterion checks if leverage has decreased over the last year. Lower leverage typically indicates reduced financial risk and stronger balance sheet.

The leverage ratio increased from 0.3746 in 2022 to 0.4773 in 2023, rising by approximately 27.4%. This indicates Elia Group has taken on more debt relative to its equity in the past year, potentially heightening financial risk. Historical data shows leverage fluctuating between 0.2659 and 0.5925 over the last 20 years, with the latest figure representing its highest point since 2020 (0.478). This trend is unfavorable for this specific criterion, earning a score of 0.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. A higher ratio is typically better, indicating better liquidity.

The Current Ratio for Elia Group in 2023 was 0.6697, down from 0.8987 in 2022. This reflects a decrease in Current Ratio, implying a potentially worsened liquidity position. Given that a ratio below 1 could indicate potential liquidity issues and that the 2023 ratio is lower than both the previous year and the industry median (0.7878 in 2023), this is a negative trend. Thus, no point is awarded for this criterion according to the Piotroski analysis.

Number of shares not diluted?

This criterion examines the change in the number of outstanding shares. A decrease in outstanding shares is generally favorable as it indicates share buybacks, suggesting management’s confidence in the company’s prospects.

In 2023, Elia Group's outstanding shares increased to 0 from 71,142,846 in 2022. According to long-term data, the number of shares has fluctuated over the past 20 years but stabilized somewhat in recent years. Despite an upward trend through 2022, the current figure of 0 does not seem logical or correct and might indicate a data reporting issue. This unusual data would not ordinarily merit a point in the Piotroski analysis due to potential inaccuracies or differing accounting practices.

Operating of Elia Group (E4S.F)

Cross Margin is growing?

Gross Margin is a profitability ratio calculated as gross profit divided by total revenue. It is a key indicator of a company's financial health and efficiency.

For the Elia Group (E4S.F), the Gross Margin improved from 0.2742 in 2022 to 0.4026 in 2023. This increase represents an upward trend indicating better cost management and competitive positioning, as higher Gross Margins typically signal a company is managing production costs well. The Gross Margin increase earns the company 1 point. Additionally, historical data shows an inconsistent trend influenced by variations across years. The recent improvement is notable but is still below the industry's median margin of 0.4109 for 2023, suggesting room for further improvements to meet or exceed industry standards.

Asset Turnover Ratio is growing?

Asset Turnover compares a company's total sales to its assets, gauging the efficiency with which a company uses its assets to generate sales.

The asset turnover for Elia Group has increased from 0.1867 in 2022 to 0.1922 in 2023. This trend is favorable as it indicates that the company is generating more sales per dollar of assets than in the previous year. An improved asset turnover can be interpreted as the company using its assets more efficiently in generating revenue, and hence, Elia Group earns 1 point for this criterion.