ISRG 438.01 (+0.17%)
US46120E6023Medical Devices & InstrumentsMedical Instruments & Supplies

Last update on 2024-06-07

Intuitive Surgical (ISRG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Intuitive Surgical's (ISRG) financial strength assessed with Piotroski F-Score for 2023 scoring 8/9. Discover ISRG's profitability, liquidity, and 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: 8

We're running Intuitive Surgical (ISRG) 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?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

Intuitive Surgical (ISRG) has a Piotroski F-Score of 8 out of 9, indicating strong financial health. The company demonstrates consistent profitability with positive net income and cash flow from operations. Its Return on Assets (ROA) is increasing, although it lags behind the industry median. The operating cash flow surpassing net income signifies robust operational performance. ISRG maintains minimal leverage, a strong current ratio, and has been actively buying back shares, reducing dilution. The asset turnover ratio is also improving, although the gross margin has seen a slight decline.

Insights for Value Investors Seeking Stable Income

Intuitive Surgical (ISRG) appears to be a strong investment based on the Piotroski F-Score analysis. With high profitability, increasing cash flows, minimal leverage, and a growing asset turnover ratio, the company's financials are impressive. While the ROA is lower than industry peers, and the gross margin has slightly decreased, the overall financial health and operational efficiency make it a stock worth considering 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 Intuitive Surgical (ISRG)

Company has a positive net income?

The criterion involves whether the Net Income is positive, signaling profitability.

Historical Net Income of Intuitive Surgical (ISRG)

For Intuitive Surgical (ISRG), the net income for the year 2023 is $1,798,000,000, which is significantly positive. This performance is crucial as it indicates that the company is profitable. Over the past 20 years, the net income has shown consistent growth with few fluctuations. Notably, the net income turned positive in 2004 and has remained so ever since, illustrating the company's robust financial health. This profitability provides the company flexibility for reinvestment and expansion and rewards shareholders, hence it is a good trend.

Company has a positive cash flow?

The Piotroski Analyses checks if the Cash Flow from Operations (CFO) is positive and awards 1 point for a positive CFO. This indicates good liquidity and operational efficiency.

Historical Operating Cash Flow of Intuitive Surgical (ISRG)

For Intuitive Surgical (ISRG), the CFO in 2023 is positive at $1.81 billion. Historically, ISRG's CFO has shown a consistent upward trend over the past two decades. For instance, their CFO has increased from -$7.85 million in 2003 to $1.81 billion in 2023. This positive and growing CFO trend is a strong indicator of the company's robust operational efficiency and liquidity. Therefore, ISRG scores 1 point for this criterion.

Return on Assets (ROA) are growing?

Change in ROA measures the efficiency of a company's asset utilization to generate profits.

Historical change in Return on Assets (ROA) of Intuitive Surgical (ISRG)

In 2023, Intuitive Surgical (ISRG) recorded a Return on Assets (ROA) of 0.1266, up from 0.0997 in 2022. This increase signifies improved asset utilization efficiency, positively impacting ISRG's ability to generate earnings from its assets. Given the increase, one point is awarded in the Piotroski Analysis. However, it's essential to consider that the industry median ROA is substantially higher, ranging from 0.5037 to 0.5549 in the last two decades. While ISRG shows an upward trend, the company still lags behind its industry peers, which may concern investors focused on competitive positioning.

Operating Cashflow are higher than Netincome?

This criterion assesses whether a company’s operating cash flow is higher than its net income, which can indicate strong earnings quality and efficient management.

Historical accruals of Intuitive Surgical (ISRG)

In 2023, the Operating Cash Flow (OCF) for Intuitive Surgical is $1,813,800,000, while the Net Income is $1,798,000,000. Since the OCF is higher than the Net Income, this criterion adds 1 point. This positive trend demonstrates that Intuitive Surgical generates more cash from its operations than it reports in net earnings, indicating robust operational performance and potentially lower earnings manipulation risk. Over the past 20 years, the operating cash flow has experienced considerable growth, from a negative value in the early 2000s to consistently positive and growing values. The net income shows a similar growth trajectory, although with some fluctuations. The company's ability to maintain higher OCF than net income in recent years further strengthens its financial health indicators.

Liquidity of Intuitive Surgical (ISRG)

Leverage is declining?

Explain the criterion for Intuitive Surgical (ISRG) and why it is important to consider

Historical leverage of Intuitive Surgical (ISRG)

Given that Intuitive Surgical's leverage ratio remained at 0 from 2022 to 2023, there was no increase or decrease. This would typically count as 0 points in the Piotroski F-Score. However, it’s noteworthy to factor in historical leverage ratios, which show that the company has had extremely low leverage consistently over the past 20 years. With values scraping the bottom or non-existent most years, Intuitive Surgical maintains a robust financial position, indicating minimal reliance on debt and reduced financial risk. Particularly, in 2021, leverage was 0.0064, significantly low, showing a preference for equity financing over debt. This is highly favorable in uncertain economic climates.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets. A higher current ratio indicates good financial health.

Historical Current Ratio of Intuitive Surgical (ISRG)

In 2023, Intuitive Surgical (ISRG) exhibited a current ratio of 4.7555, an increase from the 4.397 recorded in 2022. This improvement signals a better capacity for the company to meet its short-term liabilities, thus showcasing an improvement in liquidity. Over the past 20 years, Intuitive Surgical's current ratio has consistently been above the industry median, which ranged from 2.2373 to 2.9935. This consistent outperformance indicates the company's robust financial health and effective liquidity management. Therefore, this data results in awarding 1 point for 2023 under the Piotroski analysis criteria.

Number of shares not diluted?

Change in shares outstanding measures whether a company is diluting its stock. A decrease is positive as it indicates a company's stock is not being diluted.

Historical outstanding shares of Intuitive Surgical (ISRG)

When analyzing the change in shares outstanding for Intuitive Surgical (ISRG) from 2022 to 2023, it is clear that the outstanding shares decreased from 355,700,000 to 351,200,000. This decrease indicates that the company may be buying back shares, which is generally perceived as a positive signal to investors because it suggests that the firm is confident in its financial health and aims to enhance shareholder value. Adding a point for this aspect contributes positively to the overall Piotroski F-Score. Analyzing the historical trends over the past 20 years, there have been periods with gradual increases and isolated decreases, notably in years: 2014, 2017, 2019, and 2023. The significant drop in 2023 positions it favorably, evident when interpreted against the backdrop of isolated but strategically timed decreases, likely meaning ongoing efforts to boost per-share value.

Operating of Intuitive Surgical (ISRG)

Cross Margin is growing?

Change in Gross Margin compares the gross margin over two periods and is a key profitability measure.

Historical gross margin of Intuitive Surgical (ISRG)

Intuitive Surgical's Gross Margin has decreased slightly from 0.6744 in 2022 to 0.6639 in 2023. This is a reduction in profitability. Historical data shows fluctuations but mainly a strong performance relative to the industry's median gross margin, which stands at 0.5549 in 2023, significantly lower than ISRG's.

Asset Turnover Ratio is growing?

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

Historical asset turnover ratio of Intuitive Surgical (ISRG)

Between 2022 and 2023, Intuitive Surgical's Asset Turnover increased from 0.4691 to 0.5014. This improvement suggests that the company has become more efficient at generating revenue from its assets, a positive signal for potential investors. Over the last two decades, the company has shown fluctuations in its asset turnover, peaking at 0.702 in 2007 and reaching a low of 0.417 in 2020. The recent trend is encouraging, regaining momentum after a dip in 2020. Given the upswing between these two years, one point is added for this criterion.


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