Last update on 2024-06-07

Hochtief (HOT.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Hochtief (HOT.DE) analysis reveals its solid financial position with a Piotroski F-Score of 8/9 for 2023. Strong profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 8

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

Hochtief (HOT.DE) has scored 8 out of 9 on the Piotroski F-Score, indicating strong financial health. The criteria assessed include profitability, liquidity, and operating efficiency. The company's net income, cash flow, and gross margin have all shown positive trends. While Hochtief's return on assets (ROA) and current ratio have seen slight improvements, asset turnover has decreased, and leverage has slightly increased, which may warrant attention. The number of outstanding shares dramatically changed due to possible corporate actions. Overall, a strong profitability and good liquidity position reflect positively on Hochtief's financials.

Insights for Value Investors Seeking Stable Income

With a high Piotroski F-Score of 8, Hochtief (HOT.DE) appears to be a strong and stable investment. The company shows strong profitability, effective cash generation, and good liquidity. However, investors should monitor leverage and asset turnover. Despite these areas of slight concern, the overall financial health is positive, making Hochtief a worthwhile stock to consider for investment.

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

Profitability of Hochtief (HOT.DE)

Company has a positive net income?

Net income is a company's total earnings or profit. It is an important measure as it reflects a company's ability to generate profit from its operations. Positive net income indicates profitability.

For Hochtief (HOT.DE), the net income in 2023 is €522,749,000, which is positive. Over the past 20 years, Hochtief has experienced fluctuations in net income, including negative figures in 2011 and 2016. Nonetheless, the positive figure for 2023 suggests a period of profitability, garnering 1 point according to the Piotroski criterion. This upward trend in recent years signifies stabilizing profit levels and better fiscal health. This trend is good for the Net Income criterion.

Company has a positive cash flow?

CFO determines the amount of cash generated by a company's normal business operations. A positive CFO indicates that the company is generating sufficient cash to sustain its operations, which is a sign of good financial health.

For Hochtief (HOT.DE) in 2023, the CFO was €1,335,264,000. This positive figure adds 1 point to the Piotroski score. Historically, the last 20 years show significant variability, but recent years like 2023, 2022 (€1,050,816,000), and 2019 (€1,601,920,000) indicate strong performance. This trend is good, underscoring stability and profitability in Hochtief's core operations, making it a relatively safer investment.

Return on Assets (ROA) are growing?

Change in ROA evaluates the company's ability to improve its asset efficiency over time. It is crucial as it indicates improved profitability relative to the company’s total assets.

Hochtief's ROA increased slightly from 0.0279 in 2022 to 0.028 in 2023, indicating a positive, albeit minor, enhancement in asset efficiency. This improvement awards Hochtief one point for this Piotroski criterion. While this uptick is fine, it pales when compared with the industry median ROA of 0.2389 in 2023. Historical data shows Hochtief consistently trailing behind industry averages, which may point to specific challenges or greater inefficiencies in leveraging its assets. Nevertheless, the observed improvement within the last year suggests a trend to monitor positively.

Operating Cashflow are higher than Netincome?

Examining whether operating cash flow exceeds net income is integral because it indicates that a company is generating sufficient cash to cover its operational costs and potentially fund future growth. A higher operating cash flow relative to net income could signify strong profitability and financial health.

For 2023, Hochtief (HOT.DE) reported an operating cash flow of €1,335,264,000, compared to a net income of €522,749,000. Evidently, the operating cash flow significantly surpasses the net income, yielding a difference of €812,515,000. This substantial disparity strongly indicates that Hochtief is effectively converting its revenue into cash flow, which is a positive trend. Given this data, we add 1 point for this criterion as it showcases robust cash generation capability of Hochtief over the past year. Historically, this showcases upward movements in operational efficiency, reflective of the last two decades of consistency in their operating cash flow data.

Liquidity of Hochtief (HOT.DE)

Leverage is declining?

Change in leverage is crucial as it indicates a company's dependence on debt. A decrease in leverage is often seen as a positive sign, showing improved equity standing.

The leverage of Hochtief increased from 0.2557 in 2023 compared to 0.2762 in 2022, suggesting a higher reliance on debt year-over-year. Reviewing the 20-year historical data, there has been a general increase in leverage from the post-2010 era, peaking at 0.2762 in 2022 before a slight reduction. This trend may warrant careful observation, despite the moderate increase observed recently.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay its short-term liabilities with its short-term assets. A rising Current Ratio suggests improved liquidity.

Hochtief's Current Ratio, calculated as current assets divided by current liabilities, improved from 1.1056 in 2022 to 1.1151 in 2023. Although the increase is slight, from 1.1056 to 1.1151, it still indicates an improvement in the company's ability to cover short-term obligations with short-term assets. This positive trend results in adding 1 point for this criterion. Historically, Hochtief had a Current Ratio above the industry median only a few times in the past 20 years, with noticeable deviations such as in 2011 and 2012 where it peaked at 1.3501. However, the fluctuations over the years have generally shown a stable liquidity position close to the industry median which stood around 1.2511 in 2023.

Number of shares not diluted?

When evaluating the Piotroski F-score, the criterion of Change in Shares Outstanding assesses whether the change in shares issued over the year reflects a company’s tendency to improve profitability and returns to shareholders.

In 2022, Hochtief had 72,071,000 outstanding shares, and in 2023, the number dropped to 0. This sharp decline indicates a dramatic change, typically signaling a buyback, consolidation, or a major corporate action. Based on the Piotroski criterion, the decrease would have earned a point if it suggested a deliberate attempt to enhance profitability per share. Therefore, the result points out that in terms of the Piotroski model, Hochtief would score 1 point for this category.

Operating of Hochtief (HOT.DE)

Cross Margin is growing?

The change in Gross Margin criterion evaluates the company's efficiency in managing its production costs relative to its net sales between two periods. An increase signifies better operational efficiency and profitability.

Hochtief has experienced a Gross Margin increase from 0.2411 in 2022 to 0.2467 in 2023, reflecting a positive trend and operational improvement. This improvement yields 1 point based on the Piotroski score criteria. When surveyed over the past 20 years, Hochtief's Gross Margin fluctuations reflect its efforts to stabilize and optimize its costing structure, often outperforming the industry median. Notably, while the industry median gross margin in 2023 stands at 0.2389, Hochtief's margin outperforms it, indicating superior cost management and pricing strategies relative to peers.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets in generating sales revenue.

Hochtief's Asset Turnover has decreased from 1.5184 in 2022 to 1.488 in 2023. Given that the Asset Turnover has decreased, we assign 0 points for this criterion. This indicates a slight reduction in efficiency in using assets to generate revenue. Comparing further with historical data, the Asset Turnover has seen fluctuations over the past two decades, peaking at 1.8854 in 2006 and dipping to its lowest at 1.2872 in 2021. The current level of 1.488, though slightly down from last year, is above its two-decade low but below its historical high, reflecting moderate efficiency by Hochtief's standards.