GZ5.F 18.92 (-0.16%)
PTGAL0AM0009Oil & GasOil & Gas Integrated

Last update on 2024-06-07

Galp Energia SGPS (GZ5.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Galp Energia SGPS (GZ5.F) achieves a 5/9 Piotroski F-Score in 2023, reflecting a mixed financial position with overall improvements. Explore detailed financial analysis.

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 Galp Energia SGPS (GZ5.F) 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?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a measure from 0 to 9 that tells how strong a company's financial situation is, based on profitability, liquidity, and leverage. We're looking at Galp Energia SGPS (GZ5.F), which scored 5 out of 9. Here's how it did on each part: 1. **Profitability:** Positive net income and cash flow, but decreasing return on assets (ROA). Operating cash flow is significantly higher than net income. 2. **Liquidity:** Increasing leverage and decreasing current ratio, not great signs. But, the number of outstanding shares is dropping, indicating possible buybacks which can be good. 3. **Operating Efficiency:** Gross Margin went up, but the Asset Turnover Ratio went down. Overall, Galp shows some solid strengths in generating cash and managing costs, but has concerning signs in leverage and efficiency.

Insights for Value Investors Seeking Stable Income

Given Galp Energia SGPS's Piotroski F-Score of 5, it's an average performer. An interested investor might see strengths in its profitability and cost management but should be wary of its increasing debt and reduced efficiency in using assets. This stock might be worth a deeper look, especially if the company makes moves to reduce debt and improve efficiency. Evaluate further if you're looking for steady, if currently middling, financial performance and long-term improvement potential.

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

Profitability of Galp Energia SGPS (GZ5.F)

Company has a positive net income?

Net income, representing the company's earnings after all expenses have been accounted for, indicates the overall profitability and financial health of the company.

Historical Net Income of Galp Energia SGPS (GZ5.F)

Galp Energia SGPS (GZ5.F) has achieved a positive net income of €1,242,000,000 in 2023. Comparing with historical data, net income reveals fluctuations but maintains a generally positive trend across the past 20 years, excluding 2014 (break-even year) and 2020 (net loss of €551,000,000 due to COVID-19 impacts). Though 2023 shows a decrease from the €1,475,000,000 in 2022, consistency in generating positive income is crucial. Thus, Galp Energis receives 1 point for this criterion. This consistent profitability signals the company's steady financial framework despite occasional volatility, contributing positively to investor confidence.

Company has a positive cash flow?

Cash Flow from Operations indicates the amount of cash a company generates from its regular business operations. It is crucial because a positive CFO shows that the company can maintain and grow its operations.

Historical Operating Cash Flow of Galp Energia SGPS (GZ5.F)

Galp Energia SGPS (GZ5.F) has a positive Cash Flow from Operations amounting to €2,628,000,000 in 2023. The company has shown a trend of generally having positive CFO over the past 20 years, indicating strong operational efficiency. With a spike to €3,071,000,000 in 2022 and maintaining a robust figure in 2023, the trend reflects a well-managed company capable of generating substantial cash from its core activities. Observing this consistent positive flow, especially the recent figures, it can be said that this is a very good trend for the company.

Return on Assets (ROA) are growing?

Compare the ROA of 0.076 in 2023 with the ROA of 0.0951 in 2022. If the ROA increased in 2023 add 1 point, if not set it to 0.

Historical change in Return on Assets (ROA) of Galp Energia SGPS (GZ5.F)

The Return on Assets (ROA) of Galp Energia SGPS decreased from 0.0951 in 2022 to 0.076 in 2023. This results in setting the score to 0 according to the Piotroski criteria. An ideal scenario would show a rising ROA, reflecting superior asset utilization to generate earnings. Comparing the ROA over the past 20 years, the highest value was observed in 2006 with a ROA substantially higher than both 2022 and 2023. This long-term trend illustrates volatility in operational efficiency. Moreover, the industry median over the same period consistently outperforms Galp Energia. While the industry median ROA in 2023 stands at 22.9%, Galp's ROA at 7.6% reveals room for improvement. This trend could potentially pose concerns for investors, marking a need to closely monitor operational strategies.

Operating Cashflow are higher than Netincome?

This criteria assesses whether a company generates enough cash flow from its operations to cover its net income. It reflects the quality of earnings and the ability to generate actual cash.

Historical accruals of Galp Energia SGPS (GZ5.F)

In 2023, Galp Energia SGPS reported an Operating Cash Flow (OCF) of €2,628,000,000 and a Net Income (NI) of €1,242,000,000. As the OCF is notably higher than the NI, this criterion adds 1 point, marking a positive signal for the company. Historically, Galp Energia has shown fluctuating but generally increasing OCF. The ratio of OCF to NI demonstrates solid earnings quality and cash-generating efficiency.

Liquidity of Galp Energia SGPS (GZ5.F)

Leverage is declining?

The change in leverage criterion examines whether a company has reduced its ratio of total liabilities to total assets.

Historical leverage of Galp Energia SGPS (GZ5.F)

In the case of Galp Energia SGPS (GZ5.F), leverage has increased from 0.266 in 2022 to 0.2752 in 2023. This trend is negative as higher leverage indicates increased financial risk, implying that the company's reliance on debt for its operations has risen. A historical review reveals that this increase disrupts the deleveraging trend noted in previous years, specifically from 2019 to 2021.

Current Ratio is growing?

The Current Ratio measures a company’s ability to pay short-term obligations with short-term assets.

Historical Current Ratio of Galp Energia SGPS (GZ5.F)

Galp Energia SGPS (GZ5.F) saw a reduction in its Current Ratio from 1.6321 in 2022 to 1.5347 in 2023, indicating a decline in its liquidity position. This decline suggests a reduced ability to cover short-term liabilities with short-term assets in the recent financial period. Tracking the fluctuations over the past 20 years, the Current Ratio peaked at 2.0239 in 2015 and has generally experienced a downward trend since then. In comparison to the Industry Median, which has hovered around the same averages over the past two decades, Galp’s current ratio remains competitive, though the gap seems to be closing. This scoring criterion awards Galp a 0 for the decrease in its Current Ratio.

Number of shares not diluted?

Analyzing the change in the number of outstanding shares helps to gauge the company’s financial health and shareholder value. Increased shares often dilute shareholder value, while decreased shares can imply stock buybacks, potentially signaling strong financial health.

Historical outstanding shares of Galp Energia SGPS (GZ5.F)

Between 2022 and 2023, the outstanding shares of Galp Energia declined from 814,917,127 to 796,153,846. This reduction indicates a share buyback or other financial maneuver to reduce the number of shares, generally a positive signal implying enhanced shareholder value. The decrease in shares outstanding by approximately 2.3% leads to a score of 1 point for this criterion in the Piotroski Analysis. A historical view reflects stability with recent reductions, showcasing a focused capital strategy.

Operating of Galp Energia SGPS (GZ5.F)

Cross Margin is growing?

Gross Margin measures a company’s financial health, indicating the percentage of revenue that exceeds the cost of goods sold. A higher Gross Margin signals better efficient cost management.

Historical gross margin of Galp Energia SGPS (GZ5.F)

In 2023, Galp Energia SGPS (GZ5.F) posted a Gross Margin of 0.1433 compared to 0.0987 in 2022, indicating an increase. This suggests an improvement in Galp’s cost management and production efficiency. Over the last 20 years, Galp’s Gross Margin has been quite volatile, peaking at 0.2718 in 2015 and hitting a low of 0.0119 in 2020. Compared to the Industry Median, which stood at 0.229 in 2023, Galp’s Gross Margin is below average but shows a positive upward trend. Thus, Galp Energia gains 1 point for the increased Gross Margin in 2023.

Asset Turnover Ratio is growing?

The asset turnover ratio measures how effectively a company uses its assets to generate sales. It's essential to monitor because increasing ratios could indicate improving efficiency.

Historical asset turnover ratio of Galp Energia SGPS (GZ5.F)

Comparing the asset turnover, Galp Energia SGPS exhibited a decline from 1.7312 in 2022 to 1.2702 in 2023. This decrease suggests a reduction in efficiency in using its assets to generate sales. Examining the historical data for the last 20 years, the asset turnover ratios demonstrate a fluctuating trend, with higher values in the mid-2000s. The asset turnover has been volatile, peaking at 2.4386 in 2008 and hitting a low of 0.8673 in 2020. Therefore, for 2023, the asset turnover ratio did not increase, resulting in a score of 0 for this Piotroski criterion.


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