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Last update on 2024-06-07

HelloFresh (HFG.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

HelloFresh (HFG.DE) Piotroski F-Score Analysis for 2023: A comprehensive review assessing profitability, liquidity, and operating efficiency with a final score of 3/9.

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: 3

We're running HelloFresh (HFG.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?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a way to measure how strong a company's finances are, scoring between 0 and 9. It looks at 9 things about profitability, liquidity, and leverage. HelloFresh scored 3 out of 9, meaning it's not very strong right now. **Profitability**: HelloFresh has positive net income (€19.4 million) and cash flow (€383.8 million), earning it 1 point for each. However, its return on assets (ROA) has decreased, giving 0 points there. **Liquidity**: The company's leverage has increased slightly, its current ratio (ability to pay short-term debts) has dropped, and its shares have increased, earning 0 points in these areas. **Efficiency**: HelloFresh's gross margin (difference between sales and cost) and asset turnover (efficiency in using assets to make sales) have both decreased, giving 0 points here also.

Insights for Value Investors Seeking Stable Income

With a low score of 3 out of 9 on the Piotroski F-Score, HelloFresh seems to be a risky investment right now. Its positive net income and cash flow are good signs, but the decreasing return on assets, dropping current ratio, increased leverage, and declining efficiency are concerns. As an investor, you might want to look for stronger companies with better financial health before investing. If you're still interested in HelloFresh, keep an eye on these metrics to see if they improve in the future.

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

Profitability of HelloFresh (HFG.DE)

Company has a positive net income?

Net income measures a company's total earnings and is crucial for evaluating its profitability.

Historical Net Income of HelloFresh (HFG.DE)

The net income of HelloFresh for 2023 stands at €19,400,000, which is positive. Over the years, HelloFresh has shown a trend of reducing its net income losses. From -€113,761,000 in 2015 to achieving a positive net income starting from 2020 with €369,000,000. Hence, the company earns 1 point in this Piotroski criterion, indicating a good trend in profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) determines the amount of cash generated by a company's regular operating activities. Positive CFO is indicative of a company's ability to generate sufficient cash to maintain and grow its operations.

Historical Operating Cash Flow of HelloFresh (HFG.DE)

For the year 2023, HelloFresh's Cash Flow from Operations (CFO) stands at €383.8 million, which is significantly positive. A positive CFO not only underscores the company's profitability at the operational level but also signifies its robustness in an economic landscape burdened with volatility. HelloFresh has successfully transitioned from negative to positive CFO beginning in the year 2019, marking a financial turnaround with a trajectory that propels the company into a more secure financial footing. This transition is even more profound when contextualized with historical data showing negative cash flow in earlier years, with an all-time low of €76.07 million in 2016. This positive trend seen in recent years certainly warrants adding 1 point in the Piotroski F-score, reflecting not just the company's adept financial management but its enhanced capability to reinvest and fuel further growth.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company's profitability relative to its assets. An increasing ROA indicates better asset efficiency.

Historical change in Return on Assets (ROA) of HelloFresh (HFG.DE)

For HelloFresh (HFG.DE), we observe that the ROA decreased from 0.0536 in 2022 to 0.0076 in 2023. Given this decline, we would set this criterion to 0 points. This trend is concerning as it demonstrates a sharp decrease in asset efficiency and profitability. When comparing these figures to the industry median ROA which stands at 0.3206 in 2023, it becomes clear that HelloFresh is significantly underperforming relative to its peers. These numbers not only highlight inefficiencies but also underscore the challenges the company faces in maintaining sustainable profitability.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) higher than Net Income is important as it indicates strong financial health, showing that a company's core operations are generating more cash than its accounting income.

Historical accruals of HelloFresh (HFG.DE)

For HelloFresh (HFG.DE) in 2023, the Operating Cash Flow stood at €383.8 million, whereas the Net Income was €19.4 million. The fact that the OCF is significantly higher than Net Income earns HelloFresh a point for this criterion in the Piotroski Analysis. Over the years, there has been noticeable volatility in both these metrics. The trend in OCF surged notably from 2019 onwards, showing positive and substantial cash generation from operations (€422 million in 2019, peaking at €601.5 million in 2020). Conversely, the Net Income has shown variability but has remained positive since 2021 (€194 million). This divergence underscores the company's ability to maintain robust cash flows despite the variances in net profitability, signaling operational efficiency and financial resilience.

Liquidity of HelloFresh (HFG.DE)

Leverage is declining?

Change in Leverage assesses if a company's financial leverage has increased or decreased over a period.

Historical leverage of HelloFresh (HFG.DE)

HelloFresh's leverage increased from 0.2274 in 2022 to 0.2342 in 2023. This upward trend, although slight, suggests that the company is relying more on debt financing than equity financing when compared to the previous year. An increase in financial leverage can be a double-edged sword: on one hand, it can potentially enhance returns on equity; on the other hand, it adds more financial risk, especially if the company faces operational challenges. Given the historical leverage values, HelloFresh has had a fluctuating leverage ratio over the last decade, spiking notably in 2016 at 0.3061 and then decreasing sharply before another increase in recent years. This increase in leverage is considered unfavorable in the Piotroski Score framework and thus earns 0 points.

Current Ratio is growing?

The current ratio, a liquidity ratio that measures a company's ability to cover short-term liabilities with current assets, is key in evaluating financial health.

Historical Current Ratio of HelloFresh (HFG.DE)

In 2023, HelloFresh's current ratio dropped to 0.9035 from 0.9399 in 2022. This decline signifies that the company's immediate capacity to cover short-term debts has weakened compared to the previous year. Further examining the past 12 years, HelloFresh's current ratio fluctuated substantially from a high of 3.5815 in 2017 to less than 1 in recent years, highlighting a concerning trend in short-term financial health. Notably, the industry median stood at 0.777 in 2023, which is still below HelloFresh's ratio, suggesting that while HelloFresh's liquidity has declined, it remains marginally better positioned compared to the industry average.

Number of shares not diluted?

The Outstanding Shares criterion assesses whether a company is issuing more shares, which could dilute existing shareholders' equity, or buying back shares, which could signal confidence in the company's growth.

Historical outstanding shares of HelloFresh (HFG.DE)

In 2022, HelloFresh had 171,700,000 outstanding shares, which increased to 172,000,000 in 2023. Therefore, the Outstanding Shares have increased, resulting in 0 points for this Piotroski criterion. A rising number of shares can indicate potential dilution of existing shareholders' value unless effectively used for accretive growth projects. Over the past decade, HelloFresh's shares have generally been on an upward trend, reflecting a general expansion strategy which, although not an immediate red flag, must be closely monitored to ensure shareholder value is not being eroded due to excessive dilution.

Operating of HelloFresh (HFG.DE)

Cross Margin is growing?

Analyzing the change in Gross Margin is crucial for evaluating the company's profitability over time, enabling us to see if the company is becoming more or less efficient in its core business operations.

Historical gross margin of HelloFresh (HFG.DE)

For HelloFresh (HFG.DE), the Gross Margin has decreased from 0.6556 in 2022 to 0.6478 in 2023. This represents a reduction, thus we set the point to 0 in the Piotroski Analysis context. The trend is not positive but it’s worth mentioning that HelloFresh's Gross Margin has been consistently higher than the Industry Median over the past decade, suggesting it is still more profitable in its core operations compared to its peers. For instance, the industry median gross margin in 2023 is at 0.3206, considerably lower than HelloFresh's 0.6478.

Asset Turnover Ratio is growing?

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

Historical asset turnover ratio of HelloFresh (HFG.DE)

For HelloFresh, the Asset Turnover decreased from 3.208 in 2022 to 2.9695 in 2023. This decline suggests a deterioration in the company's efficiency at using its assets to generate revenue. Over the past decade, we've seen fluctuations in HelloFresh's Asset Turnover, hitting a high of 4.185 in 2014 and a recent low in 2017 at 2.9933. This trend can be attributed to various operational and market factors. Consequently, for 2023, the Asset Turnover does not warrant an additional point.


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