Last update on 2024-06-07

Forward Air (FWRD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Detailed Piotroski F-Score analysis of Forward Air (FWRD) for 2023 reveals financial performance insights, scoring 4 out of 9 based on profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 4

We're running Forward Air (FWRD) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score assesses the financial health of a company on a scale from 0 to 9 based on profitability, liquidity, and operating efficiency. Forward Air (FWRD) scored 4 out of 9, highlighting some positive aspects but also significant concerns. The company received points for positive net income, positive cash flow, and high operating cash flow relative to net income. However, it struggled with declining return on assets, increasing leverage, decreasing current ratio, unusual share dilution data, declining gross margin, and decreasing asset turnover ratio.

Insights for Value Investors Seeking Stable Income

Based on Forward Air's (FWRD) Piotroski F-Score of 4, the company shows some financial strengths, but there are notable areas of concern that potential investors should consider. The positive net income and cash flow are encouraging, but the declines in return on assets, leverage, and asset turnover ratio, along with the decreasing current ratio and unusual share dilution data, suggest caution. Investors might want to investigate these areas further to understand the risks better before deciding to invest.

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

Profitability of Forward Air (FWRD)

Company has a positive net income?

This criterion examines whether Forward Air (FWRD) has generated a positive net income, reflecting profitability for the year.

For 2023, Forward Air reported a net income of $167,351,000, which is unequivocally positive. A positive net income demonstrates the company's ability to generate more revenue than expenses, which is a critical indicator of financial health and operational efficiency. Over the last 20 years, Forward Air's net income trend reveals positive growth with some variability. For instance, 2009 and 2020 saw significant dips to $9,802,000 and $23,733,000, respectively, but the overall upward trajectory remained intact. Therefore, under this criterion, Forward Air scores 1 point, reflecting a strong profitability stance for 2023.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash a company generates from its core operating activities. Positive CFO implies the company is generating sufficient cash to maintain and grow its operations.

For Forward Air (FWRD), the CFO in 2023 is recorded at $181,388,000, which is positive. This is an encouraging sign for the company as it illustrates healthy cash generation from its core business activities. Examining historical data, Forward Air has consistently maintained positive CFO over the past two decades, reflecting robust core operations. Notably, there's a significant spike in 2022 with $259,090,000, which reflects a peak performance year followed by a normalization in 2023. This trend suggests continuous operational efficiency and financial stability, reinforcing the strong positive outlook indicated by the positive CFO in 2023. Therefore, for the Piotroski score calculation, Forward Air earns 1 point in this criterion.

Return on Assets (ROA) are growing?

Change in ROA looks at how the company's return on assets (ROA) evolved year-over-year. A higher ROA suggests better asset utilization to generate profits, enhancing shareholder value.

In 2023, Forward Air's return on assets (ROA) stands at 0.0799, a significant decline from 0.1661 in 2022. This sharp reduction essentially halves the company’s efficiency in generating earnings from its assets, which rings alarm bells. Unlike the 20-year trend that witnesses fluctuations but generally remain competitive with the industry median, the 2023 figure reflects a considerable dip, trailing far behind the industry median ROA of 0.1817. Such a trend could indicate systemic issues within the company, ranging from inefficient asset management to heightened operational problems. Based on this criterion, Forward Air receives 0 points.

Operating Cashflow are higher than Netincome?

The criterion of comparing Operating Cash Flow (OCF) to Net Income (NI) is crucial because OCF reveals the cash-generating capabilities of a company's core operations, whereas NI includes non-cash items like depreciation and amortization. Stronger OCF ensures that the company is generating enough cash to sustain its operations, invest in growth, and potentially return value to shareholders.

For 2023, Forward Air's (FWRD) Operating Cash Flow stands at $181.39 million, while its Net Income is $167.35 million. The fact that OCF exceeds NI is a positive indicator as it suggests that the company's core operations are generating ample cash. Over the past 20 years, Forward Air has mostly maintained an increasing trend in both OCF and NI, although fluctuations were noted in years of economic downturns like 2008 and unprecedented events like the COVID-19 pandemic in 2020. For 2023, the accruals value is extremely low at 0.0609, further underscoring the quality of earnings and a strong operational cash position, yielding a score of 1 for this criterion.

Liquidity of Forward Air (FWRD)

Leverage is declining?

Changes in leverage indicate shifts in a company's debt relative to its equity, important for assessing financial risk.

For Forward Air (FWRD), the leverage ratio increased significantly from 0.1781 in 2022 to 0.6339 in 2023, signaling a rise in the company's debt levels relative to its equity. This upward trend in leverage is concerning, as it implies higher financial risk and potential difficulty in managing debt obligations. Comparing this to the historical leverage data, it's evident that 0.6339 is the highest leverage seen in the last 20 years, which heightens risk awareness. Therefore, no point is awarded for this criterion.

Current Ratio is growing?

Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets.

In 2022, Forward Air had a Current Ratio of 1.7964, which fell to 1.4637 in 2023, marking a decrease. This trend is concerning because a lower Current Ratio implies that the company's liquidity position has weakened. Although a Current Ratio above 1 typically indicates good short-term financial health, the notable decrease suggests a trend towards a tighter liquidity position. Additionally, the company has consistently maintained a Current Ratio higher than the industry median for the past 20 years, indicating a typically stronger liquidity position than its peers. However, the decreasing trend is something investors should watch closely.

Number of shares not diluted?

Shares outstanding represent the number of shares that are currently held by shareholders. Changes in this number can impact earnings per share calculations.

The data indicates that Forward Air's outstanding shares increased from 26,783,000 in 2022 to 0 in 2023, which may be a data error. Usually, an increase in outstanding shares can mean dilution of existing shares, and in this case, it is not a favorable trend. However, detailed historical data over the last twenty years shows a generally consistent trend, only to drop dramatically to zero, which could likely be an anomaly that needs further investigation. Therefore, zero points are added for this criterion due to this apparent inconsistency in data.

Operating of Forward Air (FWRD)

Cross Margin is growing?

The Gross Margin is a company's total sales revenue minus its cost of goods sold divided by total sales revenue, expressed as a percentage. It's crucial for measuring a company's production efficiency.

Upon comparing Forward Air's Gross Margin of 0.2409 in 2023 with 0.2927 in 2022, there is a noticeable decrease. In fact, this marks a Gross Margin decline rather than an increase. Historically, the company's Gross Margins have shown volatility. Since 2003, the highest recorded Gross Margin was 0.6533 in 2009, contrasted by much lower figures subsequently, with the lowest being 0.1985 in 2015. This decline from 0.2927 to 0.2409- approximately 17.7%- is a concerning trend, demonstrating potential issues in production efficiency or higher production costs. Both the recent year's Gross Margin and the long-term trend reflect inefficiencies. Setting it against the industry median, which was 0.1817 in 2023, Forward Air is still above the median. Yet, the company’s specific downward trajectory undermines this relative standing. Therefore, taking into account the current trend and the comparative analysis, Forward Air receives 0 points for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover represents a firm's efficiency at generating sales from its assets.

From the given data, Forward Air (FWRD)'s Asset Turnover has significantly decreased from 1.4443 in 2022 to 0.6547 in 2023. This decline indicates that the company is generating lesser revenue from its assets compared to the previous year, a negative trend for this metric. Historically, the data shows a fluctuating Asset Turnover ratio, but such a sharp drop in one year is concerning. Therefore, this criterion does not add a point.