Last update on 2024-06-07

KWS SAAT SE (KWS.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Detailed Piotroski F-Score analysis of KWS SAAT SE (KWS.DE) for 2023 with a final score of 8/9. Includes profitability, liquidity, and efficiency insights.

Short Analysis - Piotroski Score: 8

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

The Piotroski F-Score evaluates a company's financial strength across 9 criteria involving profitability, liquidity, and leverage. KWS SAAT SE (KWS.DE) received a score of 8 out of 9, indicating solid financial health. The company has demonstrated consistent profitability, positive cash flows, increased return on assets, and favorable operational cash flow relative to net income, which all point to robust financial performance. However, KWS has higher leverage and a declining current ratio, highlighting some areas of financial caution.

Insights for Value Investors Seeking Stable Income

With an overall score of 8, KWS SAAT SE (KWS.DE) appears to be a strong investment option based on the Piotroski F-Score. It’s worth looking into this stock further as an investor, keeping an eye on leverage and liquidity ratios, which showed some recent negative trends. Evaluating the sector and comparing it with industry peers could provide additional reassurance before making any investment decisions.

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

Profitability of KWS SAAT SE (KWS.DE)

Company has a positive net income?

Net income indicates a company's profitability after all expenses have been deducted from revenues. Positive net income denotes financial health and profitability, crucial for investor confidence.

KWS SAAT SE (KWS.DE) reported a net income of €126,989,000 for 2023, which is positive. Historically, KWS has shown a consistent upward trend in net income over the last two decades, with only early 2000s showing zero values. The upwards climb since 2005 from €4,497,298 to the recent figure demonstrates robust financial health. With positive net income this year, KWS would score 1 point for this criterion in Piotroski analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is crucial as it measures the actual cash generated by a company's core operations. Positive CFOs signify healthy liquidity and operational efficiency.

For KWS SAAT SE (KWS.DE), the Cash Flow from Operations in 2023 is €144,654,000, indicating a positive trend. This is significant as it points to robust operational performance. Historically, the company has shown a growing trend in CFO, especially in recent years, with figures like €136,157,000 in 2020, €168,322,000 in 2021, and €100,323,000 in 2022. This increasing pattern underscores KWS SAAT SE's strong operational health. Hence, this criterion earns 1 point, reflecting positively on the Piotroski score.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability relative to its total assets, indicating how efficiently management is using its assets to generate earnings.

KWS SAAT SE's ROA has increased from 0.0429 in 2022 to 0.047 in 2023, indicating improved operational efficiency and profitability. Adding 1 point for this positive trend, the company's ROA aligns well with its historical performance, often paralleling the operating cash flow, which saw substantial growth over the last 20 years, particularly from $53 million in 2004 to around $145 million in 2023. However, it's worth noting that KWS's ROA remains significantly lower than the industry median of approximately 0.1674 in 2023. Despite improvements, this gap suggests room for further advancement compared to industry peers, reflecting potential areas for strategic focus and operational refinement.

Operating Cashflow are higher than Netincome?

The criterion assesses whether a company's operating cash flow exceeds its net income, indicating superior earning quality.

With an operating cash flow of €144,654,000 versus a net income of €126,989,000 in 2023, KWS SAAT SE displays a favorable trend for this criterion, earning it 1 point. A historical perspective shows 17 out of the last 20 years witnessing higher operating cash flow than net income, demonstrating consistent financial robustness.

Liquidity of KWS SAAT SE (KWS.DE)

Leverage is declining?

Leverage measures the extent to which a company is financing its operations through debt. It is crucial for understanding the financial risk associated with the firm.

For KWS SAAT SE, the leverage ratio increased from 0.2198 in 2022 to 0.2454 in 2023, indicating that the company has taken on more debt relative to its equity. This heightened leverage may signify increased financial risk. Historically, KWS SAAT SE has kept a relatively low leverage ratio, generally below 0.3, which speaks to a historically conservative capital structure. However, this recent uptick needs to be observed with caution as excessive leverage can lead to financial vulnerability. Therefore, KWS receives $0$ points in this criterion according to Piotroski screen.

Current Ratio is growing?

Account the trend in the current ratio of a company as it indicates liquidity ability to cover short-term obligations.

By examining KWS SAAT SE's Current Ratio over the years, we note a decrease from 2.2528 in 2022 to 2.0428 in 2023, marking a drop. The result will be 0 points based on the Piotroski criteria. Historically, the firm exhibited a pattern with ratios ranging from 1.7209 to 2.795, generally outperforming the industry median in several years. While a decline below previous levels, it still shows a strong ability to meet short-term obligations above the industry median of 2.1167 in 2023 and 1.8512 in 2022, standing robust in the sector.

Number of shares not diluted?

Change in Shares Outstanding examines the number of shares a company has issued. A decrease is generally favorable, indicating share buybacks, which can signal management's confidence in the company.

The Outstanding Shares of KWS SAAT SE remained constant at 33,000,000 between 2022 and 2023, implying no increases or decreases. Thus, no points can be added in this criterion according to Piotroski’s F-Score model. Historically, the number of outstanding shares has shown a slight fluctuation in 2018 when it fell to 32,997,679 shares and in 2019 when it increased to 33,058,413 shares before stabilizing again. Despite stable numbers in recent years, there’s no affirmative signal for share buybacks which investors might view positively.

Operating of KWS SAAT SE (KWS.DE)

Cross Margin is growing?

Gross Margin is an important measure of a company's operational efficiency, reflecting the percentage of revenue that exceeds the cost of goods sold. It's a key indicator of financial health.

In 2023, KWS SAAT SE showed a Gross Margin of 0.5626, compared to 0.5497 in 2022. This represents an increase, which is positive as it indicates improving operational efficiency. Over the past 20 years, KWS's Gross Margin has generally been above the industry median, with significant margin expansion in recent years. As a result, this trend is seen as robust and beneficial for the company's financial health and profitability. Thus, 1 point is awarded for this criterion.

Asset Turnover Ratio is growing?

In this criterion, an upward trend in asset turnover indicates better utilization of company assets to generate revenue. This is important as it signifies growth and increased operational efficiency, thus, add 1 point for an increase.

In 2023, KWS SAAT SE reported an asset turnover of 0.6738, up from 0.6123 in 2022. This marks an increase, thus resulting in the criterion receiving 1 point. This is a favorable trend suggesting better efficiency in using assets to generate revenue. Comparing the historical data, the asset turnover has shown variable trends, peaking at 1.0051 in 2009 and decreasing over recent years before the current rise. The current increase suggests a positive shift in operational efficiency for the company.