Last update on 2024-06-04

Siemens Energy (ENR.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Detailed analysis of Siemens Energy (ENR.DE) Piotroski F-Score for 2023 reveals financial challenges with a final score of 3/9. Discover key insights and metrics.

Short Analysis - Piotroski Score: 3

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

The Piotroski F-Score evaluates a company's financial health on a scale from 0 to 9, covering profitability, liquidity, and operating efficiency. Siemens Energy (ENR.DE) has been analyzed with this model. The company's current Piotroski F-Score is 3, with points awarded for positive cash flow from operations, higher operating cash flow compared to net income, and an increasing asset turnover ratio. However, Siemens Energy faces challenges such as negative net income, increasing leverage, declining current ratio and gross margin, and share dilution.

Insights for Value Investors Seeking Stable Income

Siemens Energy's Piotroski F-Score of 3 suggests it may not be a strong or undervalued investment at this time. The company faces significant financial challenges, such as consistent net losses, increasing leverage, poor liquidity, and declining profit margins. While its operational cash flow and asset turnover are positive signs, they do not outweigh the broader financial struggles. Potential investors should approach with caution and consider waiting for signs of financial improvement before investing.

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

Profitability of Siemens Energy (ENR.DE)

Company has a positive net income?

Check if Netincome of -4532000000 in 2023 is positive or negative. If it's positive add 1 point, if not set it to 0

The Netincome for Siemens Energy (ENR.DE) in 2023 is -4,532,000,000, which is negative. Over the last seven years, the trend in net income has fluctuated significantly: $910M in 2017, $547M in 2018, $158M in 2019, -$1.606B in 2020, -$453M in 2021, -$467M in 2022, and -$4.532B in 2023. This downward trend, culminating in a significant loss in 2023, is indicative of major challenges, possibly related to operational inefficiencies, market conditions, or strategic missteps. Hence, 0 points should be given for the Netincome criterion.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion looks at whether the cash flow generated from normal business operations is positive or negative. This is important as it indicates if a company can sustain its operations and growth from its internal resources without needing external financing. Positive CFO can reaffirm a company's profitability and operational efficiency.

For Siemens Energy (ENR.DE), the CFO for 2023 is €1,622,000,000, which is positive. This results in a score of 1 point based on this criterion. Observing the historical data for the last seven years, the trend appears favorable with consistent positive cash flow every year. The lowest CFO recorded was in 2017 with €686,000,000, and the highest in 2022 with €2,218,000,000. The slight dip in 2023 compared to the increased values in 2021 and 2022 doesn't appear alarming but may merit further investigation as to its causes. Overall, the long-term positive CFO indicates robust operational health for Siemens Energy.

Return on Assets (ROA) are growing?

Explain the criterion for Siemens Energy (ENR.DE) and why it is important to consider

Return on Assets (ROA) is a financial ratio that shows how profitable a company is relative to its total assets. It is an indicator of how efficient a company's management is at using its assets to generate earnings. An increase in ROA would suggest that the company is getting better at converting its investments into net income.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is a crucial indicator for Siemens Energy as it demonstrates that earnings are supported by actual cash flow rather than accounting adjustments.

In 2023, Siemens Energy's Operating Cash Flow was €1.622 billion, while the Net Income stood at -€4.532 billion. This substantial difference highlights that, despite the net loss, the company generated significant cash flow from its operations. This trend is evident over the last seven years. For example, in 2017, Operating Cash Flow was €686 million compared to a Net Income of €910 million, showing generally increasing cash flow versus fluctuating earnings. This consistency adds 1 point, indicating solid operational management. The key takeaway is that cash generation remains strong, even amidst earnings volatility, suggesting robust core business activities.

Liquidity of Siemens Energy (ENR.DE)

Leverage is declining?

Change in leverage is one of the nine criteria used in Piotroski Analyses and focuses on the difference in the debt-to-assets ratio from one year to the next. A decrease in leverage is considered positive.

The leverage for Siemens Energy increased from 0.0484 in 2022 to 0.0666 in 2023. This 37.60% increase is considered negative as it indicates higher financial risk. Historical data show fluctuations in leverage, with a notable recent increase after a period of stability and improvement.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity.

Comparing the current ratios of Siemens Energy, we find that it decreased from 1.0245 in 2022 to 0.8408 in 2023. This trend is concerning as it indicates a reduction in the company's liquidity. For context, the industry median current ratio for 2023 is 1.0239, suggesting that Siemens Energy is below the industry average. This discrepancy points to potential challenges the company may face in meeting its short-term obligations, thus earning a score of 0 for this criterion.

Number of shares not diluted?

The change in shares outstanding refers to the difference in the number of shares that a company has issued. An increase in outstanding shares could imply dilution, whereas a decrease is often seen as a positive sign.

Siemens Energy's outstanding shares increased from 720,827,000 in 2022 to 828,902,000 in 2023. This trend is considered unfavorable according to the Piotroski scoring method, as it indicates potential dilution of shares. Over the last 20 years, the number of outstanding shares increased from 399,654,856 in 2017 to 828,902,000 in 2023. Based on this, Siemens Energy would not receive a point for change in shares outstanding, yielding a score of 0.

Operating of Siemens Energy (ENR.DE)

Cross Margin is growing?

Gross margin evaluates a company's financial health by revealing the proportion of revenue over cost of goods sold, and it's critical in analyzing profitability.

Observing the gross margin of Siemens Energy (ENR.DE), there is a marked decrease from 0.1152 in 2022 to 0.0242 in 2023. This significant drop in gross margin (a decrease of 0.091) suggests a pressing issue, as it indicates higher production costs or lower sales revenue relative to costs. Over the past years, the gross margin trend has shown fluctuation, peaking at 0.1746 in 2017 and consistently declining since. Compared to the industry median, Siemens Energy's gross margin in 2023 severely lags behind the industry median of 0.194, indicating a competitive disadvantage. This reduced margin for 2023 clearly indicates a negative trend, earning a score of 0 according to the Piotroski F-score criteria.

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.

Siemens Energy’s Asset Turnover has increased from 0.6092 in 2022 to 0.6287 in 2023. This upward trend demonstrates improved efficiency in utilizing its assets to generate sales. Over the last 20 years, the company's highest asset turnover was 0.6535, registered in 2021. Since the ratio for 2023 has increased compared to 2022, we can give it 1 point. This improvement is essential for potential investors as it reflects better operational efficiency and a stronger capacity to generate revenue from assets.