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Fuchs Petrolub (FPE3.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Review of Fuchs Petrolub (FPE3.DE) Piotroski F-Score for 2023, scoring 8/9, highlighting the company's strong financial health, profitability, and 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: 8

We're running Fuchs Petrolub (FPE3.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?
1
Operating Cashflow are higher than Netincome?
1
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?
1

The Piotroski F-Score is used to gauge a company's financial strength. Fuchs Petrolub (FPE3.DE) scores an 8 out of 9, indicating strong profitability, sound liquidity, and efficient operations. Key points include a positive net income, robust cash flow, rising return on assets (ROA), a healthy current ratio, and efficient asset turnover. However, the company scores no point on leverage as it has increased over the last year, posing higher risk. Overall, Fuchs Petrolub exhibits robust financial health with minor concerns about growing debt.

Insights for Value Investors Seeking Stable Income

Based on the analyses, Fuchs Petrolub looks like a solid investment with an 8 out of 9 Piotroski F-Score. The strong profitability, cash flow, and other positive indicators suggest it's worth further investigation for potential investment. However, investors should watch the leverage increase closely to ensure it doesn’t compromise financial stability.

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

Profitability of Fuchs Petrolub (FPE3.DE)

Company has a positive net income?

Net income assesses a company's profitability. Positive net income indicates that the company is making more than it spends, crucial for long-term viability.

Historical Net Income of Fuchs Petrolub (FPE3.DE)

Fuchs Petrolub's net income for 2023 stands at €282 million, which is a positive figure. This earns the company 1 point according to the Piotroski F-Score. Over the past 20 years, Fuchs Petrolub has consistently recorded positive net income, as shown in the data: from €29.7 million in 2003 to €282 million in 2023. The steady increase signifies strong and consistent profitability, which is favorable for investors and stakeholders.

Company has a positive cash flow?

Checking if the cash flow from operations (CFO) is positive is critical because it indicates a company's ability to generate sufficient cash to maintain and grow operations. Positive CFO suggests healthy liquidity and operational efficiency.

Historical Operating Cash Flow of Fuchs Petrolub (FPE3.DE)

For the year 2023, Fuchs Petrolub's CFO stands at €543,000,000, indicating a positive cash flow. Comparing this with historical data shows a significant improvement from €128,000,000 in 2022, which marks a resurgence in liquidity and operational efficiency. Over the past 20 years, CFO has been generally positive, except for a noticeable dip in 2020 to €169,000,000, likely due to the COVID-19 pandemic's impact. Therefore, based on 2023's CFO, Fuchs Petrolub earns 1 point, showcasing an upward trend and strong financial health.

Return on Assets (ROA) are growing?

Change in ROA measures the improvement or deterioration of a company's profitability relative to its total assets. It's important as it shows how efficiently the company utilizes its asset base.

Historical change in Return on Assets (ROA) of Fuchs Petrolub (FPE3.DE)

For Fuchs Petrolub (FPE3.DE), the Return on Assets (ROA) increased from 0.1072 in 2022 to 0.114 in 2023. This increment signifies a positive trend and thus, 1 point is awarded. Analyzing the last 20 years, the historical ROA has fluctuated. For example, in crises periods like 2008, the company's ROA dropped significantly reflecting economic challenges. Comparing these figures with the industry median ROA, Fuchs Petrolub had generally been underperforming given the industry median ROA ranges around 0.3. In 2023, the industry median ROA stands at 0.3018, which is still significantly higher than Fuchs Petrolub's. However, the increasing trend in Fuchs Petrolub's ROA should be viewed positively as it suggests ongoing improvement in the company’s operational efficiency and profitability.

Operating Cashflow are higher than Netincome?

Evaluate if the operating cash flow is higher than net income and why it is an important indicator for Fuch Petrolub (FPE3.DE).

Historical accruals of Fuchs Petrolub (FPE3.DE)

For the year 2023, Fuchs Petrolub's operating cash flow was €543 million, while its net income amounted to €282 million. The fact that the operating cash flow exceeds net income is a positive indicator, scoring 1 on the Piotroski scale. This trend suggests strong cash generation capabilities relative to reported earnings. Such a discrepancy indicates that the firm is effectively converting profits into actual cash flow, which is essential for sustaining operations, financing growth, and weathering economic downturns. Historically, Fuchs Petrolub exhibits remarkable variability in its operating cash flow, peaking in 2023 compared to its lowest point in 2022 (€128 million). The consistent rise in cash flow juxtaposed with stable net income reinforces the notion of efficient operational management.

Liquidity of Fuchs Petrolub (FPE3.DE)

Leverage is declining?

Leverage measures a company's debt levels relative to its equity. A decrease in leverage is favorable as it indicates better financial health and lower risk, adding 1 point in Piotroski's score.

Historical leverage of Fuchs Petrolub (FPE3.DE)

Comparing the leverage figures, Fuchs Petrolub's leverage increased from 0.0071 in 2022 to 0.0111 in 2023. This increment suggests an increase in the company's debt relative to its equity. Historically, leverage has been quite minimal, maintaining zero from 2003 to 2018, thereafter slowly increasing but remaining below 0.01 until 2023. The current trend shows an upward shift, indicating higher risk and reduced financial robustness. The leverage standing at 0.0111 means assigning 0 points for this criterion according to Piotroski's analysis, since the aim is to observe a declining leverage for a healthier financial status.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is important as it indicates the financial health and capacity of the company to cover its short-term liabilities with short-term assets.

Historical Current Ratio of Fuchs Petrolub (FPE3.DE)

The Current Ratio for Fuchs Petrolub increased from 2.2189 in 2022 to 2.3676 in 2023. This trend is good for the criterion, adding 1 point as the Current Ratio rose. Historically, Fuchs Petrolub has had a higher Current Ratio compared to the industry median, demonstrating stronger short-term financial stability. For example, in 2022 the company's ratio was 2.2189 while the industry median was 1.9759. In 2023, it further improved to 2.3676 against an industry median of 1.9399, reflecting better liquidity management and financial resilience.

Number of shares not diluted?

Change in Shares Outstanding measures the difference in the number of shares a company has over a specific period. It is important as it affects ownership dilution and earnings per share (EPS).

Historical outstanding shares of Fuchs Petrolub (FPE3.DE)

In 2022, Fuchs Petrolub had 138,387,249 outstanding shares, which decreased to 134,847,900 in 2023. This decrease of approximately 3,539,349 shares (around 2.56%) indicates the company might have engaged in share buybacks or other capital structure optimization strategies. Historically, the company’s outstanding shares fluctuated, peaking in 2006 at 155,628,000, then showing a general downward trend. The reduction in shares outstanding increases our Piotroski score by 1 point, as it is favorable and suggests management’s effort to enhance shareholder value.

Operating of Fuchs Petrolub (FPE3.DE)

Cross Margin is growing?

Change in Gross Margin captures the efficiency and profitability of using raw materials and labor to produce products compared to the previous year.

Historical gross margin of Fuchs Petrolub (FPE3.DE)

Fuchs Petrolub's Gross Margin increased from 0.3089 in 2022 to 0.3234 in 2023. This step up points to enhanced efficiency and cost management, which is favorable for profit growth. Additionally, the company's Gross Margin has been historically above the industry median Gross Margin, reflecting a consistent competitive advantage. Given the increasing trend of 0.0145, Fuchs Petrolub earns 1 point for the Piotroski score in this criterion.

Asset Turnover Ratio is growing?

The Asset Turnover ratio indicates how efficiently a company uses its assets to generate sales. It's calculated by dividing sales by total assets. A higher ratio suggests better performance.

Historical asset turnover ratio of Fuchs Petrolub (FPE3.DE)

In 2023, Fuchs Petrolub posted an Asset Turnover of 1.4319, showing a slight increase from the 1.4117 recorded in 2022. This increase—albeit minor—credits the company a point in the Piotroski Analysis. Historical trends reveal that this ratio has seen fluctuations, peaking at 1.9648 in 2008 and dipping to its lowest at 1.148 in 2020. This recent uptick may indicate improved asset efficiency or operating conditions. While the increase is marginal, maintaining or improving this key performance indicator is a positive signal to investors.


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