EXC 35.24 (-0.23%)
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Last update on 2024-06-06

Exelon (EXC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Exelon (EXC) achieves a 6/9 Piotroski F-Score in 2023, reflecting its financial strength through profitability, liquidity, and asset turnover efficiency.

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: 6

We're running Exelon (EXC) 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?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

Exelon (EXC) was analyzed using the Piotroski F-Score, which assesses a company's financial health on a scale of 0 to 9 based on profitability, liquidity, and efficiency. Exelon achieved a score of 6. The company showed strong profitability with a positive net income of $2.33 billion in 2023 and operating cash flow exceeding net income at $4.703 billion. Return on Assets (ROA) improved from the previous year, and the Asset Turnover Ratio showed significant growth. However, liquidity indicators were mixed: while the current ratio improved, leverage increased, implying higher financial risk. Additionally, Exelon's gross margin declined, and share dilution was noted.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, Exelon shows solid fundamentals in profitability and operational efficiency, making it a moderate choice for investors seeking stable returns. The consistent positive cash flow and increasing ROA are promising, but potential investors should be cautious of the rising leverage and share dilution. Exelon's ability to maintain its profitability and operational efficiencies in future periods will be critical. It is worth considering for investment, but understanding the leverage and dilution trends should be a priority before making a decision.

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

Profitability of Exelon (EXC)

Company has a positive net income?

The criterion examines if the company's net income is positive. Positive net income indicates profitability, which is crucial for assessing the financial health and sustainability of the company.

Historical Net Income of Exelon (EXC)

Exelon's net income for 2023 stands impressively at $2,328,000,000—that's a solid $2.33 billion, ample proof of the company's profitability. This trend is not new either; looking at Exelon's net income over the past two decades, we see a consistent pattern of profitability. Key high points include 2017 with $3.77 billion and 2019 with $2.93 billion in net income. The lowest in recent memory was 2003, when net income was $905 million. Even in that year, the company managed to remain profitable, speaking volumes about its robust business model and effective management. Overall, this trend is undoubtedly positive and demonstrates the company's sustained ability to generate substantial profits.

Company has a positive cash flow?

Cash Flow from Operations (CFO) determines if a company generates enough cash flow to maintain and grow operations.

Historical Operating Cash Flow of Exelon (EXC)

Exelon's CFO in 2023 stands at $4,703,000,000, which is importantly positive. Historically, Exelon has demonstrated a strong ability to generate positive cash flow, with its CFO peaking at $8,645,000,000 in 2018 and hitting a 20-year low of $2,147,000,000 in 2005. Over the last two decades, Exelon's CFO has been consistently positive which reflects stability in its operational cash generation. This trend is favorable as consistently positive CFO indicates the company's competence in managing operational cash flow efficiently.

Return on Assets (ROA) are growing?

Compare the ROA of Exelon (EXC) in 2023 versus 2022 and why it is important to consider.

Historical change in Return on Assets (ROA) of Exelon (EXC)

In 2023, Exelon (EXC) posted a Return on Assets (ROA) of 0.0236, which is an upward movement compared to the ROA of 0.019 in 2022. The increase in ROA indicates improved operational efficiency in converting invested capital into profit. Given this positive trend, Exelon earns 1 point for this criterion. Consistently increasing ROA year-over-year is critical as it reflects a company's growing proficiency in leveraging its assets to generate earnings. This increase signals effective management and potential for higher returns for shareholders. When juxtaposed with the industry's median ROA of 0.3416 in 2023, Exelon's ROA still remains notably below the median, indicating room for improvement; however, its upward trajectory is a promising sign. Historically, examining the last 20 years' data points illustrates significant fluctuations, emphasizing the need for continuous improvements and stability in ROA to ensure long-term sustainable growth.

Operating Cashflow are higher than Netincome?

The criterion checks if Operating Cash Flow is higher than Net Income, indicating the company's ability to translate income into cash.

Historical accruals of Exelon (EXC)

For the year 2023, Exelon (EXC) reported an Operating Cash Flow of $4.703 billion compared to a Net Income of $2.328 billion. Given that the operating cash flow is indeed higher than net income, Exelon earns a point for this criterion. This trend is positive as it highlights the company's strong ability to convert its net earnings into actual cash, which is crucial for meeting obligations, reinvesting, and providing shareholder returns. Historically, Exelon's Operating Cash Flow has often surpassed Net Income, reinforcing the company's operational robustness over the years.

Liquidity of Exelon (EXC)

Leverage is declining?

Change in Leverage compares the company's leverage ratios year-over-year to assess financial risk.

Historical leverage of Exelon (EXC)

A change in Exelon's (EXC) leverage from 0.374 in 2022 to 0.3947 in 2023 indicates an increase in leverage. This trend is negative as higher leverage often implies increased financial risk due to higher debt levels. Historically, leverage fluctuated between 0.2168 (2013) and 0.3947 (2023). A higher leverage ratio could be a result of increased borrowing to finance operations or investments.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. A rising current ratio indicates improving liquidity, which is vital for meeting operating expenses and investing for growth.

Historical Current Ratio of Exelon (EXC)

Exelon's current ratio has increased from 0.6914 in 2022 to 0.8109 in 2023. This reflects a positive trend, as it suggests enhanced liquidity. Despite this improvement, it remains below the industry median of 0.8538 for 2023, raising a cautious note for stakeholders. Historically, Exelon's current ratio has fluctuated, peaking at 1.6817 in 2015.

Number of shares not diluted?

Outstanding shares refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors. Changes in this metric can affect Earnings Per Share calculations and signal management's capital strategy.

Historical outstanding shares of Exelon (EXC)

From 2022 to 2023, Exelon's outstanding shares increased from 994 million to 996 million. This rise of 0.2% reflects a long-term trend observable over the last two decades, with shares increasing from 658 million in 2003. Despite periods of stabilization, the overall growth suggests ongoing capital-raising efforts. For investors, increasing shares can be dilutive, affecting EPS and share value negatively, therefore receiving a score of 0 in this Piotroski analysis criterion.

Operating of Exelon (EXC)

Cross Margin is growing?

Change in Gross Margin: Compare the Gross Margin of 0.4109 in 2023 with the Gross Margin of 0.421 in 2022 and check if Gross Margin increased or decreased.

Historical gross margin of Exelon (EXC)

The Gross Margin of Exelon (EXC) has decreased from 0.421 in 2022 to 0.4109 in 2023. This represents a decline, which, according to the Piotroski F-Score criterion, results in 0 points being awarded for this measure. This decline is notable in the context of the last two decades where the highest gross margins were observed in the mid-2000s, for instance, 0.6658 in 2006. Furthermore, the industry median gross margin for 2023 is lower at 0.3416 compared to Exelon's 0.4109. Despite the decrease from 2022 to 2023, Exelon still surpasses the industry median, indicating a relatively strong position within its industry. Nevertheless, a focus on understanding the drivers behind the recent decrease in gross margin will be crucial for sustaining its competitive edge.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures a company's efficiency in using its assets to generate revenue by comparing recent figures with previous ones.

Historical asset turnover ratio of Exelon (EXC)

Exelon (EXC) has shown an increase in its Asset Turnover from 0.1671 in 2022 to 0.2207 in 2023, which is a 32% improvement. This trend is favorable as it indicates that the company is utilizing its assets more efficiently to generate revenue. Historically, Exelon's Asset Turnover ratio has experienced fluctuations, recording the highest value at 0.4194 in 2007. More recent data shows recovery from a low of 0.1368 in 2021, emphasizing improved operational efficiency in 2023. Given this uptick, 1 point can be added to Exelon's Piotroski score.


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