INCY 65.84 (+1%)
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Last update on 2024-06-05

Incyte (INCY) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Incyte (INCY) Piotroski F-Score 2023 analysis with a final score of 5/9. Comprehensive financial insights on profitability, liquidity, and operating 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: 5

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

The Piotroski F-Score for Incyte (INCY) is 5 out of 9, indicating a moderate financial position. This score derives from positive net income, positive cash flow from operations, and increased Return on Assets (ROA). However, current concerns include that operating cash flow is not exceeding net income, a slight increase in leverage, higher current ratio that is still below the industry median, increased share dilution, decreasing gross margin, and lower asset turnover compared to the previous year. Overall, recent trends suggest improving profitability and operational efficiency but raise questions on liquidity and asset utilization.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 5, Incyte (INCY) shows a mix of strengths and weaknesses. The positive trends in profitability and cash flow are promising, but there are concerns about liquidity, leverage, and asset turnover. As an investor, it may be worth keeping an eye on Incyte to see if the positive momentum continues but also being cautious due to potential issues in efficiency and financial strategy. Further research and monitoring of the company's upcoming financial statements are recommended before making an investment decision.

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

Profitability of Incyte (INCY)

Company has a positive net income?

Net income evaluates a company's profitability. A positive net income increases shareholder value, thus it is critical for assessing financial health.

Historical Net Income of Incyte (INCY)

For Incyte (INCY), a net income of $597,599,000 in 2023 is positive, garnering 1 point for the Piotroski analysis. Historically, Incyte's net income has fluctuated, notably enduring negative figures for many years. A positive 2023 value is a promising trend, reinforcing stability and growth, given previous difficult years.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a critical measure of a company's ability to generate cash through its core business operations. It is essential for assessing the company's operational efficiency.

Historical Operating Cash Flow of Incyte (INCY)

Incyte's CFO for 2023 stands at $496,487,000, which is positive, thereby granting one point according to the Piotroski Analysis. This positive cash flow indicates a healthy inflow from operations, reflecting operational efficiency. When compared with historical data, especially notable values like $969,941,000 in 2022 and $336,227,000 in 2018, the CFO trend appears to be solid. Fluctuations in prior years, such as the negative CFO in 2019 (-$124,599,000) and other earlier years with negative CFOs, could reflect periods of significant investment or one-off expenditures, but the recent positive trend over the last few years strengthens confidence in Incyte's operational competencies.

Return on Assets (ROA) are growing?

Change in ROA is a critical measure of a company's efficiency in generating profits relative to its assets from year to year.

Historical change in Return on Assets (ROA) of Incyte (INCY)

Incyte (INCY) has seen its Return on Assets (ROA) increase from 0.0632 in 2022 to 0.0947 in 2023. This positive trend is a good sign, suggesting improved efficiency in generating profits from its asset base. The improvement in ROA adds 1 point in the Piotroski score, indicating that Incyte is becoming more effective in using its assets to generate earnings. Comparing this to the industry median ROA, which stands at a significantly higher 0.4518 for 2023, Incyte still has a considerable gap to close. However, the upward trend is a promising indicator of future performance.

Operating Cashflow are higher than Netincome?

The criterion examines whether the Operating Cash Flow surpasses Net Income. A higher Operating Cash Flow suggests more robust cash management and real earnings quality.

Historical accruals of Incyte (INCY)

In 2023, Incyte’s Operating Cash Flow stood at $496,487,000, which is lower than its Net Income of $597,599,000. This criterion results in a score of 0. Examining historical data, the years 2019, 2020, and 2021 show instances where the Operating Cash Flow significantly surpassed Net Income, reflecting stronger operational cash inflows. However, this trend reversed in 2022 and 2023, indicating potential concerns regarding the sustainability of earnings.

Liquidity of Incyte (INCY)

Leverage is declining?

Change in Leverage evaluates if a company's leverage or use of debt to finance assets has decreased, which indicates improved financial health.

Historical leverage of Incyte (INCY)

Those following volatility in Incyte Corporation’s financial leverage may note a slight increase in leverage from 0.0043 in 2023 to 0.0052 in 2022, marking a trend reversal. Despite this insignificance numerically, this slight raise does compromise one positive criterion of the Piotroski Analysis and penalizes Incyte 1 point. Historically, the company's leverage has seen more drastic fluctuations—from as high as 1.7048 in 2008 to almost negligible levels in recent years—highlighting efforts to optimize its capital structure. However, 2023's uptick implies increased financial risk compared to the documented past advances in debt management.

Current Ratio is growing?

The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets and is crucial for evaluating liquidity.

Historical Current Ratio of Incyte (INCY)

Incyte's current ratio increased from 3.5372 in 2022 to 3.7451 in 2023. This change is positive as it suggests improved liquidity, enabling the company to cover its short-term obligations more comfortably. Historical data indicates fluctuations, with current ratios ranging from 2.2916 to 15.289 over the past 20 years, while the industry median current ratio varied between 2.4722 and 8.0558. Despite the increase, Incyte's 2023 current ratio of 3.7451 is still below the industry median of 5.7831, indicating room for improvement relative to peers.

Number of shares not diluted?

This criterion examines changes in the number of shares outstanding, reflecting potential dilution or share buybacks.

Historical outstanding shares of Incyte (INCY)

In 2022, Incyte’s shares outstanding were 222,004,000 and increased to 223,628,000 in 2023. Thus, the outstanding shares increased, yielding a score of 0 for this criterion. Reviewing historical data from the past 20 years reveals a consistent trend: Incyte’s shares have progressively increased from 71,369,000 in 2003 to 223,628,000 in 2023. This upward trend, although common for growth companies raising capital, implies potential dilution for existing shareholders.

Operating of Incyte (INCY)

Cross Margin is growing?

Gross margin is calculated as gross profit divided by revenue, and it reflects the core profitability of a company. A rising gross margin trend is generally perceived as a positive indicator which suggests that the company is becoming more efficient in generating profits relative to its production costs.

Historical gross margin of Incyte (INCY)

The Gross Margin for Incyte (INCY) in 2023 is 0.931, a slight decrease from 0.939 in 2022. Therefore, the Gross Margin has not increased in 2023, resulting in 0 points for this criterion. Analyzing the longer trend, Incyte's gross margin over the past 20 years has exhibited some volatility, particularly from 2010 to 2015, when it began a gradual decline from nearly perfect efficiency (1.0) to its current state. Despite this decrease, Incyte's gross margin remains substantially higher than the industry median gross margin of 0.4518 in 2023, which indicates that the company is still maintaining a competitive edge in terms of core profitability. However, the declining gross margin highlights the potential challenges Incyte might be facing in managing its production costs or maintaining pricing leverage.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. It is calculated as sales divided by total assets.

Historical asset turnover ratio of Incyte (INCY)

Incyte's Asset Turnover has decreased from 0.6301 in 2022 to 0.5855 in 2023. This indicates a less efficient utilization of the company's assets in generating sales year-over-year, resulting in a negative trend. Therefore, for the Piotroski score, this criterion would earn 0 points. Looking at the 20-year chart, Incyte's Asset Turnover has fluctuated but has generally remained moderate compared to the highs seen in 2012 (0.901) and the lows in 2008 (0.0154). This could suggest variation in how Incyte's operational efficiencies impact sales generation.


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