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Last update on 2024-06-06

FMC (FMC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

FMC's Piotroski F-Score for 2023 stands at 5/9, reflecting medium financial health with strengths in ROA, current ratio & profitability but concerns in cash flow.

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 FMC (FMC) 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?
0
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score evaluates a company's financial strength on a scale of 0-9, using nine criteria related to profitability, liquidity, and operating efficiency. FMC (FMC) scored 5 on the Piotroski F-Score, showing strengths and weaknesses in various areas. Key findings include positive net income growth and ROA, increasing current ratio, and reduced shares outstanding. However, negative cash flow from operations, declining asset turnover and rising leverage raise concerns.

Insights for Value Investors Seeking Stable Income

The mixed Piotroski F-Score results for FMC warrant caution. While the company shows strong profitability trends, efficient asset utilization, and a healthier liquidity position, the negative cash flow from operations and increasing leverage are red flags. Potential investors should investigate these issues further 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 FMC (FMC)

Company has a positive net income?

One of the major criteria in Piotroski analysis is checking the profitability of a company by evaluating its net income.

Historical Net Income of FMC (FMC)

The net income for FMC (FMC) in 2023 is $1,321,500,000, which is positive. Therefore, FMC earns 1 point for this criterion. It's noteworthy that the net income has seen a pronounced growth over the last 20 years, witnessing a substantial increase especially in recent years. For instance, the net income surged from $736,500,000 in 2022 to $1,321,500,000 in 2023, indicating strong profitability and a significant upward trend. This consistent increase in net income reflects FMC's effective management and sound financial health.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is the cash a company generates from its regular business activities and operations. Positive CFO indicates that the firm is generating enough cash to maintain or expand its operations, crucial for the company's sustainability.

Historical Operating Cash Flow of FMC (FMC)

In 2023, FMC reported a CFO of -$386,400,000, reflecting a sharp decline compared to the previous year when CFO was $582,400,000. This negative cash flow trend in 2023 is unfavorable as it signifies the company is not generating sufficient cash from its core operations. Comparing this with the historical data, FMC's CFO has generally been positive, with significant peaks such as in 2020 with $647,800,000. However, there are instances of negative CFOs like in 2015 and 2023. A negative CFO results in a score of 0 for this criterion, indicating financial distress or difficulties in operational cash generation.

Return on Assets (ROA) are growing?

Change in ROA is the measure of the return a company generates on its assets in one year compared to the previous year. A positive trend signals improved profitability.

Historical change in Return on Assets (ROA) of FMC (FMC)

FMC Corporation (FMC) reported an ROA of 0.1144 in 2023 compared to 0.0674 in 2022. This improvement adds 1 point to FMC’s Piotroski score, reflecting better utilization of the company’s assets to generate profit. Historically, FMC’s operating cash flow has shown variability, including negative values, which underlines the significance of this positive trend. Compared to the industry median ROA of 0.3092 in 2023, FMC's ROA is still lower but the trend is in the right direction, signaling potential for further alignment with industry performance.

Operating Cashflow are higher than Netincome?

One of the Piotroski criteria states that high operating cash flow compared to net income implies good earnings quality, since cash flow is seen as less prone to manipulation.

Historical accruals of FMC (FMC)

In 2023, FMC reported an operating cash flow of -386.4 million USD compared to a net income of 1.3215 billion USD. This is quite concerning as it denotes that operating cash flow is significantly lower than net income. Over the past 20 years, FMC has generally maintained positive operating cash flows, with a notable positive trend in cash flows post-2015. However, the dramatic swing to a negative operating cash flow in 2023 suggests potential underlying issues with the company's ability to generate cash from core operations. As a result, no point should be awarded under this criterion of the Piotroski Analysis.

Liquidity of FMC (FMC)

Leverage is declining?

Change in Leverage measures how much the company's financial debt has changed relative to its equity. A decrease indicates less financial risk.

Historical leverage of FMC (FMC)

FMC Corporation's leverage ratio increased from 0.2562 in 2022 to 0.2639 in 2023. This 2.98% rise in leverage suggests the company has taken on more debt relative to its equity. Historically, FMC's leverage peaked at 0.3653 in 2003 and hit the lowest point at 0.1515 in 2010; with recent trends, leverage is relatively lower than historical highs but indicates a slight uptick in financial risk for 2023. This trend is potentially negative as it implies increased financial obligations.

Current Ratio is growing?

Current Ratio evaluates a company's ability to pay its short-term obligations with its short-term assets. An increase in this ratio indicates a stronger liquidity position.

Historical Current Ratio of FMC (FMC)

The Current Ratio for FMC has increased from 1.4314 in 2022 to 1.5154 in 2023, which is a positive trend leading to adding 1 point. This trend suggests FMC is in a better position to cover its short-term liabilities. Over the last 20 years, the company's current ratio has experienced fluctuations, peaking at 2.0977 in 2009 and hitting a low at 1.308 in 2004. Interestingly, FMC's current ratio has often been close to or above the industry median, except for a few years such as 2022 when the industry median was 2.0561 while FMC's was 1.4314.

Number of shares not diluted?

Change in Shares Outstanding evaluates if shares were issued or repurchased. A decrease in shares is favorable.

Historical outstanding shares of FMC (FMC)

Examining FMC's shares data, we see shares decreased from 125,975,000 in 2022 to 125,060,000 in 2023. This trend shows a reduction of 915,000 shares. Historically, FMC's shares have varied, with a prior peak around 149 million in 2004 and a consistent downtrend later. The consistent decrease aligns with shareholder value strategies. Therefore, FMC gains 1 point for this criterion.

Operating of FMC (FMC)

Cross Margin is growing?

Change in Gross Margin.

Historical gross margin of FMC (FMC)

Based on the given gross margin values, FMC's gross margin has increased from 0.401 in 2022 to 0.4081 in 2023. This represents a marginal improvement. Therefore, we add 1 point for this criterion. Additionally, over the last 20 years, FMC has generally exhibited a consistent upward trend in its gross margin, except for some interruptions. When compared to the industry median, FMC's gross margin has been consistently higher, particularly in the more recent years. The industry median gross margin for 2023 stands at 0.3092, significantly lower than FMC's 0.4081, suggesting FMC's superior operational efficiency. Such a trend underscores a robust competitive positioning and may imply better pricing power or cost management strategies in FMC's operations.

Asset Turnover Ratio is growing?

Change in Asset Turnover: Compare the Asset Turnover of 0.3885 in 2023 with the Asset Turnover of 0.5312 in 2022

Historical asset turnover ratio of FMC (FMC)

The Asset Turnover for FMC (NYSE: FMC) has seen a noticeable decline in 2023, registering at 0.3885 compared to the previous year’s 0.5312. This represents a downturn rather than an increase, suggesting inefficiency in utilizing assets to generate sales. The trend can be troubling as asset turnover has a direct correlation to how well a company converts its assets into sales revenue. Given this downward trend, the score for this criterion would be 0. When examining the historical data for the last 20 years, one can observe that FMC's Asset Turnover ratio has shown fluctuations, peaking in the mid-2000s (e.g., 1.0879 in 2008) and then experiencing a downward trend in more recent years. The year 2023’s asset turnover is among the lowest observed, indicating potential efficiency issues or changing business conditions affecting their ability to drive sales from existing asset bases.


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