Last update on 2024-06-07

Elbit Systems (ESLT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Elbit Systems' Piotroski F-Score for 2023 is 4/9, highlighting areas of profitability, liquidity, and leverage analysis.

Short Analysis - Piotroski Score: 4

We're running Elbit Systems (ESLT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Elbit Systems (ESLT) has been evaluated using the Piotroski F-Score, which ranges from 0 to 9 and measures a company's financial strength. ESLT scored 4/9, indicating mixed results. The company has a positive net income and cash flow from operations but has seen a declining return on assets. Its operating cashflow is lower than its net income. ESLT's leverage has increased, and its current ratio has declined slightly, with a small amount of share dilution. The gross margin is slightly down, but the asset turnover has improved.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Elbit Systems (ESLT) shows some strengths but also some weaknesses. A score of 4 indicates that the stock isn't performing optimally across all financial measures. While the positive net income and cash flow from operations are strong points, the declines in return on assets and gross margin, along with increased leverage and slight share dilution, are concerns. Investors may want to investigate further or consider the stock cautiously, especially in comparison to other opportunities with higher scores.

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

Profitability of Elbit Systems (ESLT)

Company has a positive net income?

This criterion looks at whether the company has posted a positive net income, which indicates profitability and overall financial health.

In 2023, Elbit Systems (ESLT) reported a net income of $215,131,000. This is not only positive but continues a similarly strong trend that has characterized its financial performance over the past two decades. Over the past 20 years, the company has seen its net income fluctuate, yet consistently remain positive, reflecting durable profitability and effective financial management. For instance, the net income soared to $204,176,000 in 2008 and demonstrated resilience during various economic conditions, peaking at $275,448,000 in 2022. This positive net income for 2023 adds 1 point to the Piotroski F-score, endorsing the company's steady financial health.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash generated by a company's regular business activities.

In 2023, Elbit Systems reported a CFO of $113,709,000, which is positive, earning a score of 1 for this criterion. Despite a drop from the previous years, where 2021 and 2022 saw CFOs of $416,932,000 and $240,068,000 respectively, a positive CFO in 2023 still indicates that Elbit Systems' core business activities are generating cash. Over the last 20 years, Elbit Systems has maintained a generally positive CFO, with the exception of a negative CFO in 2019. This consistency in positive cash flows, despite periodic declines, portrays a solid foundation for operational sustainability.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) indicates how effectively a company can generate profit from its assets.

The ROA for Elbit Systems (ESLT) in 2023 is 0.0227, compared to 0.0297 in 2022. This indicates a decrease in profitability and efficiency in utilizing assets. Consequently, for the Piotroski criterion, this results in 0 points instead of 1. This decrease might be unfavorable when compared to the industry median ROA, which has been consistently much higher, such as the 0.2484 reported for 2023.

Operating Cashflow are higher than Netincome?

Explain the criterion for Elbit Systems (ESLT) and why it is important to consider

Operating Cash Flow higher than Net Income is a crucial metric because it indicates that a company's core business operations are generating more cash than is being reported as net income. This suggests healthy cash flow management and potentially conservative accounting practices. However, for Elbit Systems in 2023, the Operating Cash Flow was $113.71 million, which is lower than the Net Income of $215.13 million, resulting in a score of 0.

Liquidity of Elbit Systems (ESLT)

Leverage is declining?

Change in leverage is evaluated to understand a firm's financial risk by comparing its debt levels year over year.

Elbit Systems (ESLT) witnessed an increase in leverage from 0.1112 in 2022 to 0.0767 in 2023, indicating a rise in financial risk. Over the last 20 years, the leverage values exhibited volatility, reaching their peak at 0.1551 in 2007. Given that the leverage increased in 2023, unfortunately, ESLT does not score a point for this criterion.

Current Ratio is growing?

Change in Current Ratio in the context of Piotroski Analysis and its comparative relevance.

When evaluating the change in the current ratio for Elbit Systems (ESLT), it is observed that the Current Ratio has slightly decreased from 1.1764 in 2022 to 1.1418 in 2023. This shows a downward trend, marking a marginal decline of approximately 2.94%. As stated, if the current ratio had increased in 2023, the company would have been assigned 1 point, in accordance with the Piotroski F-Score model. Given this downward movement, Elbit Systems will score 0 points in this criterion. Historical context shows fluctuating ratios with a general trend of industry median remaining higher—ESLT's increasing need to manage liquidity optimally cannot be overlooked.

Number of shares not diluted?

Shares outstanding measure how many shares of a company's stock are currently owned by shareholders. An increase can signal dilution.

Elbit Systems (ESLT) has seen an increase in outstanding shares from 44,322,000 in 2022 to 44,375,000 in 2023. This represents an increase of 53,000 shares, amounting to a 0.12% growth. Historically, the company has seen general stability in its share count, with increases being relatively small year-on-year. However, the trend tilts slightly towards dilution, which could be concerning if the capital raised does not yield proportional shareholder value. For instances nearly 41 Mio in 03 to more then 44Mio 2023 shares increased overall compared.

Operating of Elbit Systems (ESLT)

Cross Margin is growing?

Evaluate whether the company's profit from sales minus its cost of goods sold has improved or not by comparing Gross Margins of consecutive years.

In 2023, Elbit Systems reported a Gross Margin of 0.2482, which is a slight decrease from the Gross Margin of 0.2492 in 2022. This decrease, represented by a minimal drop of 0.1%, warrants awarding zero points based on the Piotroski criterion for Gross Margin improvement. Historically, the Gross Margin has seen various fluctuations, peaking at around 0.2999 in 2009 and hitting its lowest at approximately 0.2452 in 2006. When comparing this to the industry median for the same periods, Elbit Systems' Gross Margins have consistently outperformed—even in decline years—indicating a robust underlying competitive advantage. However, the recent decline within a competitive industry emphasizes the need for enterprise introspection into operational efficiencies or market factors driving these minute contractions.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate revenue. A rise typically indicates better performance.

The Asset Turnover ratio for Elbit Systems has increased from 0.5948 in 2022 to 0.6304 in 2023, earning a point in the Piotroski Score. Historically, the ratio has shown fluctuations, it peaked in 2009 at 0.9461, followed by a gradual decline, hitting a low in 2022. The increase in 2023 is a positive signal, suggesting enhanced operational efficiency.