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Heineken (HEIA.AS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Heineken HEIA.AS - Analyzed using the Piotroski F-Score for 2023, scoring 4 out of 9. Insights on profitability, liquidity, and operational 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: 4

We're running Heineken (HEIA.AS) 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?
0
Asset Turnover Ratio is growing?
0

Heineken scored 4 out of 9 on the Piotroski F-Score, which assesses a company's financial health based on nine criteria. The score indicates mixed financial performance, making it a moderately strong company. Heineken shows consistent profitability with a positive net income and cash flow. However, it faces challenges in liquidity and leverage, with rising debt levels and a decreasing current ratio. The company has efficient operational performance, as cash flow is higher than net income, but declines in ROA and asset turnover ratio highlight inefficiencies. Lack of growth in gross margin and asset turnover further reflect financial hurdles.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 4, Heineken shows some strengths in profitability and operational efficiency. However, the declining liquidity and leverage underscore rising financial risks. Given this mixed analysis, it may not be the best choice for risk-averse investors, but it could be considered by those comfortable with some financial instability, banking on the company's history of profitability and cash generation capabilities.

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

Profitability of Heineken (HEIA.AS)

Company has a positive net income?

Determine if the Net Income for Heineken in 2023 is positive or negative. This is crucial as a positive net income is a fundamental indicator of profitability and financial health.

Historical Net Income of Heineken (HEIA.AS)

For the fiscal year 2023, Heineken has reported a net income of €2,304,000,000, which is evidently positive. This earns Heineken a score of 1 point under the Piotroski criteria for positive net income. Historically, Heineken has largely demonstrated positive net income over the past 20 years, except for a dip in 2020 when it recorded a negative value. The company's positive net income trend is generally a good sign, reflecting its steady profitability. This consistent fiscal performance could make Heineken an attractive investment, indicating resilience and effective management.

Company has a positive cash flow?

Positive cash flow from operations indicates a company's ability to generate sufficient cash to sustain its operations, signifying financial health.

Historical Operating Cash Flow of Heineken (HEIA.AS)

Heineken's Cash Flow from Operations (CFO) for the year 2023 is reported as €4.43 billion, which is indeed positive, thereby adding 1 point to the Piotroski score. Analyzing the trend over the last 20 years, Heineken has consistently demonstrated robust cash flow generation, with only minor fluctuations during economic downturns. Specifically, Heineken's operating cash flow has steadily increased from €2.31 billion in 2008 to €4.43 billion in 2023, highlighting the company's resilience and efficient operational management. This steady positive cash flow trend is a good indicator of the company's ability to generate ample liquidity from its core business operations, underscoring its financial stability.

Return on Assets (ROA) are growing?

The criterion compares the ROA (Return on Assets) from the past two years to gauge profitability. An increase signifies better efficiency.

Historical change in Return on Assets (ROA) of Heineken (HEIA.AS)

Heineken's ROA decreased from 0.053 in 2022 to 0.0428 in 2023. This decline indicates reduced profitability and lower efficiency in utilizing its assets. Historically, Heineken's ROA fluctuated, shortening the gap with the industry median of 0.4353 in 2023 versus 0.5194 in 2003. The decrease in 2023 signals a potential challenge for investors, comparing the 2023 ROA to past trends and industry standards. This trend is not favorable, so the score is set to 0.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income indicates a company's business generates sufficient cash to cover net income, signifying strong financial health. It's crucial as it highlights better operational efficiency.

Historical accruals of Heineken (HEIA.AS)

For Heineken in 2023, the Operating Cash Flow is €4,430,000,000 compared to a Net Income of €2,304,000,000. This shows the Operating Cash Flow is indeed higher, resulting in a Positive trend (1 point). This trend indicates that Heineken maintains robust operational efficiency, generating ample cash to cover its income. This characteristic typically reflects a financially healthy company, as it underscores efficiency in operations and sound cash management. Historically, Heineken had strong cash flow, as seen from the substantial figures over the past two decades, which range from €2,310,554,000 in 2008 to a peak of €4,496,000,000 in 2022.

Liquidity of Heineken (HEIA.AS)

Leverage is declining?

Change in Leverage signifies the alteration in the company's financial structure, often representing shifts in debt levels. It's essential for assessing financial risk.

Historical leverage of Heineken (HEIA.AS)

The Leverage ratio for Heineken increased from 0.246 in 2022 to 0.2547 in 2023. This rise is a signal that the company's debt level relative to its assets has grown. Comparing to historical data, Heineken's leverage was higher in years like 2008 with 0.4219 and has generally trended downwards until this recent rise in 2023. This isn't a favorable trend as it might imply increased financial risk, hence no additional point is awarded.

Current Ratio is growing?

Define and think over Current Ratio for liquidity analysis in Piotroski Scores.

Historical Current Ratio of Heineken (HEIA.AS)

Heineken's Current Ratio in 2023 stands at 0.7689, showing a small decline from 0.7763 in 2022. Consequently, it doesn't add to the Piotroski Score's current ratio. The downward trend in liquidity raises concerns, signalling less ability to cover short-term obligations; however, it aligns chronically below the sector's median average of 0.836 in 2023 compared to the sector's historical highs, dimming optimism around liquidity improvement.

Number of shares not diluted?

Change in Shares Outstanding is critical as it provides insight into potential dilution or share buybacks.

Historical outstanding shares of Heineken (HEIA.AS)

In 2022, Heineken had 575,563,505 outstanding shares, but this number dropped to 0 in 2023, which typically represents stock repurchase or some anomaly in reporting. Consequently, we can attribute a score of 1 as the decrease in shares is seen as positive, signaling shareholder-friendly actions. The trend shows unusual drops to zero in reporting for multiple years. Therefore, while the trend may appear erratic, the decrease itself adds 1 point for this criterion.

Operating of Heineken (HEIA.AS)

Cross Margin is growing?

Gross Margin measures the proportion of revenue that remains after deducting the cost of goods sold, reflecting the efficiency of production and pricing strategy. A higher gross margin indicates better control over production costs and stronger pricing power, which is vital for a company's profitability.

Historical gross margin of Heineken (HEIA.AS)

The Gross Margin decreased from 0.3517 in 2022 to 0.3387 in 2023, resulting in a decrease of 0.013. This indicates lower efficiency in production or increased costs. Although Heineken's current Gross Margin is 0.3387, which is lower than the industry median of 0.4353, it is essential to consider historical trends. Over the last 20 years, Heineken's Gross Margin has fluctuated significantly, achieving a high of 0.3912 in 2019 and a low of 0.1645 in 2008. While the recent decrease is a concern, it does not necessarily indicate a long-term negative trend, given the broader industry challenges.

Asset Turnover Ratio is growing?

Asset turnover ratio measures a company's efficiency in using its assets to generate sales revenue. A higher ratio indicates better performance.

Historical asset turnover ratio of Heineken (HEIA.AS)

In 2023, Heineken's asset turnover ratio was 0.5646, slightly lower than 0.5673 in 2022. This indicates a minor decrease in efficiency. Over the past two decades, the trend shows fluctuations but a notable decrease from 0.7323 in 2009 to 0.5646 currently. This sustained decline points to challenges in maintaining asset efficiency. Hence, for the Piotroski score, Heineken should be assigned 0 points for this criterion, reflecting deteriorating performance.


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