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Last update on 2024-06-04

E.ON (EOAN.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

E.ON (EOAN.DE) Piotroski F-Score Analysis 2023. E.ON achieves 5/9 reflecting company's financial strengths and vulnerabilities. Detailed financial insights included.

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.
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Short Analysis - Piotroski Score: 5

We're running E.ON (EOAN.DE) 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?
0
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

E.ON's (EOAN.DE) Piotroski F-Score is 5 out of 9, indicating a moderately healthy financial state. The company demonstrated profitability with a net income of €517 million in 2023 and a positive operating cash flow of €5.65 billion. Despite these positives, there were critical shortcomings, including declining return on assets (ROA) and Asset Turnover ratios. The company's leverage decreased significantly, showing reduced debt, but its current ratio declined, suggesting potential liquidity issues. The number of shares outstanding increased, and this dilution negatively impacted its score. Overall, E.ON shows signs of strong operational capabilities but needs improvement in asset management and liquidity.

Insights for Value Investors Seeking Stable Income

E.ON (EOAN.DE) is worth considering for potential investors due to its positive profitability and operating cash flow, as well as significant reductions in leverage, showing operational strength and improved debt positioning. However, investors should be cautious of the declining asset turnover and ROA, as well as the falling current ratio, which suggests potential liquidity risks. Ongoing share dilution is another factor to keep in mind. Thoroughly evaluate these aspects and monitor for improvements in asset efficiency and liquidity before making any decisions.

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

Profitability of E.ON (EOAN.DE)

Company has a positive net income?

Net Income measures a company's profitability after all expenses have been deducted from its total revenue. It is crucial as it indicates the company's financial health.

Historical Net Income of E.ON (EOAN.DE)

The net income for E.ON (EOAN.DE) in 2023 stands at €517 million, marking a positive trend. This positively impacts the Piotroski score, adding 1 point. Analyzing a two-decade trajectory reveals fluctuations, including significant losses between 2011 and 2014. Steadily recovering from heavy losses in early 2010s to a positive net income in 2023 is a promising signal for E.ON’s financial stability. The recent profits indicate robust operational efficiency, counteraction of former deficits and proficient cost management strategies.

Company has a positive cash flow?

Operating Cash Flow (CFO) indicates the cash a company generates from its regular business operations. This is one of the critical markers of a company's financial health.

Historical Operating Cash Flow of E.ON (EOAN.DE)

For E.ON (EOAN.DE), the CFO in 2023 stands at €5,654,000,000, which is positive. Over the past 20 years, the company has shown variability in its operating cash flow, with a notable dip into negative territory in 2017 (-€2,952,000,000) and substantial positive values in years like 2010 (€11,085,000,000) and 2020 (€10,045,000,000). Given the positive CFO in 2023, E.ON has effectively generated cash from its core business operations, earning 1 point in this criterion. This positive trend points toward solid operational performance, especially in recovering from negative cash flow in prior years.

Return on Assets (ROA) are growing?

ROA, or Return on Assets, measures the profitability of a company relative to its total assets and is crucial for gauging management efficiency.

Historical change in Return on Assets (ROA) of E.ON (EOAN.DE)

Based on the given data, the ROA for E.ON (EOAN.DE) has decreased from 0.0144 in 2022 to 0.0042 in 2023. This trend is an unfavorable indicator for this criterion. To put this into perspective, the long-term industry median ROA has been substantially higher, with the median hovering around 0.3416 in 2023. Such a significant drop in ROA highlights potential inefficiencies in asset utilization or declining profitability, underlying the need for strategic changes. E.ON's operating cash flows, although fluctuating over the years, exhibited a spike in 2021 at approximately €10.045 billion but decreased to €5.654 billion in 2023, suggesting volatile operational outcomes. Consequently, according to the Piotroski Analysis, this lead to a score of 0 for this criterion.

Operating Cashflow are higher than Netincome?

The criteria checks if Operating Cash Flow is higher than Net Income. It is crucial as it indicates the firm’s ability to generate enough money to maintain or grow its operations.

Historical accruals of E.ON (EOAN.DE)

In 2023, E.ON (EOAN.DE) reported an Operating Cash Flow of €5.65 billion and a Net Income of €517 million. Since the Operating Cash Flow is significantly higher than the Net Income, this robust cash generation capacity demonstrates E.ON's effective management. Over the past 20 years, their Operating Cash Flow has generally followed an upward trajectory, affirming consistent operational performance, despite some fluctuations. Hence, this trend is favorable, warranting a score of 1 for this criterion.

Liquidity of E.ON (EOAN.DE)

Leverage is declining?

Change in Leverage is derived from the Leverage ratio, which indicates the proportion of debt used in a company's capital structure. A decrease in Leverage is usually seen as a positive indicator.

Historical leverage of E.ON (EOAN.DE)

In 2023, E.ON's leverage dropped from 0.2001 in 2022 to 0. This effectively means E.ON eliminated a significant portion of its debt. Historically, E.ON’s leverage fluctuated modestly, apart from a peak in 2018 with a leverage ratio of 0.7667. The reduction to 0 shows E.ON has improved its financial stability significantly. Hence, the decrease should add 1 point according to the Piotroski criteria. This trend is good as it signifies enhanced financial health.

Current Ratio is growing?

The Current Ratio is a measure of a company's ability to pay short-term obligations with short-term assets. A ratio above 1 indicates that a company has more current assets than current liabilities and can cover its short-term obligations.

Historical Current Ratio of E.ON (EOAN.DE)

The Current Ratio of E.ON decreased from 0.9637 in 2022 to 0.8101 in 2023. This indicates a decline in the company's ability to cover its short-term liabilities with short-term assets. Historically, E.ON has shown variability in its Current Ratio with significant swings, such as 1.536 in 2018 compared to 0.7526 in 2016, and the latest figure of 0.81 is below the 20-year average which aligns more closely with the industry median for 2023 at 0.8538. This downward trend in the Current Ratio is noted as unfavorable, setting the point to 0, indicating that the decreased Current Ratio is not a positive sign.

Number of shares not diluted?

Change in shares outstanding refers to the difference in the number of a company's available shares for trading over a certain period. It is critical to assess as it reflects company decisions on share issuance, buybacks, and capital restructuring, impacting shareholder value and earnings per share (EPS).

Historical outstanding shares of E.ON (EOAN.DE)

Upon reviewing the outstanding shares for E.ON (EOAN.DE) from 2022 to 2023, it is evident that outstanding shares have increased from 2,609,000,000 to 2,611,000,000. This represents an increase of 2,000,000 shares year over year. Consequently, according to the Piotroski F-score criteria, no point is awarded since the outstanding shares did not decrease. Additional data for the last 20 years show a fluctuating trend in outstanding shares. Notable increases can be observed in 2015 and 2019. The consistent rise from 2018 to 2023 suggests ongoing issuance, potentially for fundraising, M&A activities, or operational expansion. Therefore, for this criterion, E.ON receives a score of 0, as an increase does not contribute positively to the Piotroski F-score framework aimed at identifying value opportunities.

Operating of E.ON (EOAN.DE)

Cross Margin is growing?

Gross Margin indicates the percentage of revenue that exceeds the cost of goods sold. A higher Gross Margin reflects a greater efficiency in converting revenue into actual profit.

Historical gross margin of E.ON (EOAN.DE)

Comparing the Gross Margin of E.ON, 0.3295 in 2023 to 0.0705 in 2022, we see a significant improvement. This marks an increase of approximately 367.37%, from 7.05% to 32.95%. Over the last 20 years, Gross Margin for E.ON has shown substantial fluctuation, hitting a low of around 0.0006 in 2021 and reaching its highest at 0.3295 in 2023. Concurrently, the industry median Gross Margin remains relatively stable, though generally higher, hovering between 0.2683 in 2022 and 0.3416 in 2023. Although E.ON's Gross Margin in 2023 significantly outstrips its 2022 showing, it remains below the industry median. Consequently, for the period of 2022 to 2023, E.ON's improved gross margin adds 1 point in this Piotroski criterion.

Asset Turnover Ratio is growing?

The Asset Turnover measures the efficiency of a company’s use of its assets in generating sales revenue. It is calculated as sales divided by average total assets. A higher ratio indicates better efficiency.

Historical asset turnover ratio of E.ON (EOAN.DE)

The Asset Turnover ratio for E.ON (EOAN.DE) has decreased from 0.9115 in 2022 to 0.757 in 2023, marking a decline. This drop suggests a reduced efficiency in using assets to generate sales. Historically, E.ON's Asset Turnover has seen fluctuations, peaking at 0.971 in 2015. The long-term trend shows variability, but the recent year-on-year decline does not contribute positively to the Piotroski score. Therefore, 0 points are added for this criterion.


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