Last update on 2024-06-07

Grand City Properties (GYC.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

In-depth 2023 Piotroski F-Score analysis for Grand City Properties (GYC.DE), highlighting its financial strengths and weaknesses with a final score of 3/9.

Short Analysis - Piotroski Score: 3

We're running Grand City Properties (GYC.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Grand City Properties (GYC.DE) has a Piotroski F-Score of 3, which indicates weak financial health based on the evaluation criteria. The company faces challenges in profitability, liquidity, and efficiency, with significant declines in net income and ROA. On the positive side, the company shows a growing asset turnover and strong operational cash flow. However, increasing leverage and decreasing current ratio and gross margin are major concerns. Additionally, a rise in the number of shares is dilutive for existing shareholders.

Insights for Value Investors Seeking Stable Income

Based on the current Piotroski F-Score and financial metrics, Grand City Properties does not appear to be a strong investment option right now. The sharp decline in profitability and rising debt levels are red flags that require caution. Potential investors should consider conducting further analysis or looking for more financially stable opportunities.

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

Profitability of Grand City Properties (GYC.DE)

Company has a positive net income?

The Netincome criterion in Piotroski Analysis evaluates whether the company has posted a positive net income for the year, which is indicative of profitability.

With a net income of -513,807,000 in 2023, Grand City Properties falls short in this crucial criterion. This is a significant drop from the previous years, where the company had consistently demonstrated steady or increasing profitability. In 2022, the net income was 153,964,000, which starkly contrasts with the 2023 figure. This negative net income earns the company 0 points for this criterion in the Piotroski Analysis. Historically, the company's net income has shown an upward trend, with notable peaks in 2016 (358,450,000) and 2017 (565,092,000). However, the sharp decline in 2023 could signal underlying issues that warrant further investigation. It is crucial for potential investors to understand what caused this downturn.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates whether a company is generating sufficient cash flows from its core business activities.

Reviewing the CFO for 2023, Grand City Properties (GYC.DE) documented CFO of €249,407,000, a positive value which contributes positively by adding 1 point to the overall Piotroski score. Comparing historical data, we observe an upward trend from €456,000 in 2008 to the current €249,407,000 in 2023, with minor fluctuations. Over the last decade, CFO has consistently hovered around the €200 million mark, suggesting robust operational efficiency and strong core earnings capability.

Return on Assets (ROA) are growing?

The Change in Return on Assets (ROA) criterion gauges whether a company is effectively increasing its profitability relative to its asset base. This measure is pivotal for understanding asset efficiency and effective asset utilization in generating profits.

In 2023, the return on assets (ROA) for Grand City Properties was -0.0466 compared to 0.0136 in 2022. This substantial decline indicates a deterioration in the company's ability to generate earnings from its assets. Even though the median ROA for the industry has also witnessed a downward trend from 0.4314 in 2022 to 0.4039 in 2023, Grand City Properties exhibits a sharper deviation from the industry standard. This negative trend is further compounded by historical data where the company has shown positive operating cash flows consistently over the last 20 years, highlighting that the current ROA slump points towards a deeper underlying issue in efficiency or profitability of assets. Overall, this decline is an adverse indicator given the Piotroski score criteria.

Operating Cashflow are higher than Netincome?

Explain the criterion for Grand City Properties (GYC.DE) and why it is important to consider

Operating cash flow (OCF) being higher than net income (NI) indicates that the company's earnings are backed by strong cash flow, rather than non-cash accounting adjustments. This is crucial for assessing the quality of earnings and the company's ability to generate actual cash. For Grand City Properties (GYC.DE), in 2023, the OCF was €249.407 million while NI was -€513.807 million.

Liquidity of Grand City Properties (GYC.DE)

Leverage is declining?

Change in Leverage is vital as it indicates the level of debt used by the company to finance its assets. A decrease in leverage is generally seen as positive, suggesting improved financial stability and less dependency on external financing.

The leverage ratio for Grand City Properties has seen an increase from 0.3583 in 2022 to 0.3882 in 2023. This suggests that the company has used more debt relative to its equity in the more recent period. Historical data shows that this is not an unprecedented situation, given previous instances of higher leverage such as in 2013, when the leverage was 0.3997. The increasing trend in leverage is generally seen as negative because it indicates growing dependency on debt, thereby increasing financial risk. Consequently, for the Piotroski Analysis criterion of Change in Leverage, Grand City Properties scores 0 points this year.

Current Ratio is growing?

Change in Current Ratio evaluates a company's ability to pay short-term liabilities with short-term assets. An increasing ratio indicates better liquidity.

The Current Ratio for Grand City Properties (GYC.DE) decreased from 3.6733 in 2022 to 2.8154 in 2023. This decline indicates a reduction in the firm's liquidity and its ability to meet short-term liabilities using short-term assets. Compared to the industry median ratio, which was 1.6881 in 2023, GYC.DE still maintains a stronger liquidity position. However, the drop in the ratio results in 0 points for this Piotroski criterion.

Number of shares not diluted?

Change in shares outstanding is significant as it impacts both earnings per share (EPS) and shareholders' ownership dilution. Analysts often prefer to see stable or decreasing shares over time.

The outstanding shares for Grand City Properties increased from 168,170,000 in 2022 to 172,352,000 in 2023. This represents an increment in shares, a development that typically dilutes existing shareholders' ownership. Moreover, this trend conforms to the company's long-term pattern: over the last 20 years, shares outstanding have predominantly risen, spiking significantly from 55,500,000 in 2008 to well over 172 million currently. Thus, for this criterion, Grand City Properties scores 0 points.

Operating of Grand City Properties (GYC.DE)

Cross Margin is growing?

Gross Margin compares a company's production efficiency. Gross Margin is calculated by dividing Gross Profit by Net Revenue and measures how well production costs are managed.

For Grand City Properties, the Gross Margin has decreased from 0.3276 in 2022 to 0.3216 in 2023. This reduction implies worse cost efficiency or that the company faced higher production costs for the same level of revenue. Grand City's Gross Margin is still substantially lower than the industry median of 0.4039 in 2023, indicating that the company is lagging behind its peers. Hence no point is added for Gross Margin under the Piotroski Analysis due to the decline.

Asset Turnover Ratio is growing?

Asset Turnover is a measure of a firm's efficiency in using its assets to generate sales. A higher ratio indicates that the company is utilizing its assets more efficiently.

Comparing the Asset Turnover for Grand City Properties in 2023 (0.0373) with 2022 (0.0349), we observe an increase. This positive change implies that the company has become slightly more efficient in generating revenue from its assets. A trendline analysis over the last 20 years, however, shows a dramatic decline from peaks in earlier years (e.g., 0.1538 in 2013). Nonetheless, the uptick from 2022 to 2023 is a welcome, albeit small, positive sign. For this criteria, Grand City Properties earns 1 point.