LANC 186.35 (+0.71%)
US5138471033Consumer Packaged GoodsPackaged Foods

Last update on 2024-06-07

Lancaster Colony (LANC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Lancaster Colony's financial position using the Piotroski F-Score for 2023, which scores 8/9 based on nine key criteria of 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 Lancaster Colony (LANC) 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?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score for Lancaster Colony (LANC) is 8 out of 9, indicating a strong financial position based on profitability, liquidity, and operating efficiency. The criteria used involve positive net income, positive cash flow, increasing ROA, operating cash flow higher than net income, declining leverage, growing current ratio, no shares dilution, improving gross margin, and increasing asset turnover. Lancaster Colony has shown strong performance in almost all areas, particularly in net income, cash flow, asset efficiency, and liquidity with a slight shortfall in share dilution in 2023.

Insights for Value Investors Seeking Stable Income

Given LANC's high Piotroski F-Score of 8, it is worth considering for investment. The company demonstrates robust profitability, efficient cash generation, strong asset utilization, and sound liquidity, which are vital indicators of financial health. However, it's important to note the slight increase in outstanding shares, which could affect shareholder value. Overall, LANC appears to be a strong, undervalued investment with positive long-term potential.

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

Profitability of Lancaster Colony (LANC)

Company has a positive net income?

Net income is the total profit of a company after all expenses have been deducted from revenues. A positive net income is a strong indicator of profitability.

Historical Net Income of Lancaster Colony (LANC)

The net income for Lancaster Colony in 2023 stands at $111,286,000, which is positive. This is a crucial indicator of the company's profitability and positive financial health. In comparison to past years, it shows resilience despite the dip observed in 2022 where the net income was $89,586,000. Over the last 20 years, Lancaster Colony has mostly stayed in the positive range, with occasional drops, though none into negative territory. This is a good trend and merits adding 1 point to its score.

Company has a positive cash flow?

Cash Flow from Operations (CFO): high CFO means a company generates enough cash from its core business operations to maintain its operations and potentially grow.

Historical Operating Cash Flow of Lancaster Colony (LANC)

In 2023, Lancaster Colony (LANC) reported a Cash Flow from Operations (CFO) of $225.901 million, which is significantly positive. This upward trend is a positive sign for the company, as it indicates robust cash generation from its primary business activities. When compared to the past two decades, the 2023 CFO figure reflects the highest operating cash flow during this period. For instance, in 2018, the CFO was $160.714 million, and in 2019, it was $197.598 million. The substantial increase in 2023 highlights the company's improved operational efficiency and its enhanced ability to turn revenue into cash flows, crucial for sustaining growth and shareholder returns.

Return on Assets (ROA) are growing?

ROA stands for Return on Assets which measures a company's profitability relative to its total assets. An increasing ROA indicates improved efficiency in asset utilization to generate earnings.

Historical change in Return on Assets (ROA) of Lancaster Colony (LANC)

The ROA for Lancaster Colony (LANC) has increased from 0.0818 in 2022 to 0.101 in 2023. This increase is positive, reflecting that Lancaster Colony has become more efficient at using its assets to generate net income. This trend is good since better asset utilization typically leads to better profitability and shareholder value.

Operating Cashflow are higher than Netincome?

The criterion evaluates whether the operating cash flow is higher than the net income, signifying better quality of earnings as it reflects actual cash generation.

Historical accruals of Lancaster Colony (LANC)

For Lancaster Colony (LANC) in 2023, the operating cash flow was $225,901,000, which is significantly higher than the net income of $111,286,000. This is a positive sign, suggesting strong cash generation and potentially higher earnings quality. Historically, LANC has generally maintained a positive spread between operating cash flow and net income, as seen from the past 20 years’ data. This trend is favorable.

Liquidity of Lancaster Colony (LANC)

Leverage is declining?

Change in Leverage assesses whether a company has improved its financial health by reducing its debt relative to its equity.

Historical leverage of Lancaster Colony (LANC)

The Leverage for Lancaster Colony (LANC) decreased from 0.0228 in 2022 to 0.0173 in 2023. This is indicative of a reduction in debt levels, which is favorable. Historically, the leverage ratio has seen considerable fluctuations, with higher peaks such as 0.1057 in 2008 and drops to zero in some years. The general trend towards lower leverage in recent years is a positive signal for potential investors. Therefore, for the year 2023, LANC scores 1 point for the change in leverage criterion.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities to evaluate its ability to cover short-term obligations. This ratio is crucial for assessing the company's short-term liquidity and financial health.

Historical Current Ratio of Lancaster Colony (LANC)

Lancaster Colony (LANC) has seen its Current Ratio increase from 2.1245 in 2022 to 2.219 in 2023, indicating improved short-term liquidity. Historically, LANC has generally maintained a Current Ratio higher than the industry median. For instance, the company's average Current Ratio over the past 20 years stands significantly above the industry average. Specifically, while the industry median hovered around 1.63 to 1.89, LANC's ratio fluctuated between a higher range of approximately 2.10 to 5.39. This augmentation in 2023 suggests a sustained rubric of financial prudency, ensuring that LANC remains comfortably above its industry peers. Hence, 1 point is awarded for the positive trend in Current Ratio.

Number of shares not diluted?

Change in Shares Outstanding can indicate buyback activity or dilution, affecting earnings per share and shareholder value.

Historical outstanding shares of Lancaster Colony (LANC)

Based on the data provided, Lancaster Colony (LANC) saw its Outstanding Shares increase slightly from 27,448,000 in 2022 to 27,462,000 in 2023. This trend indicates that there is no share buyback activity for these years, which generally doesn't favor investors as it can dilute the value per share. Hence, by the Piotroski Analysis criterion for Outstanding Shares, this change scores 0 points. Historically, over the last 20 years, we also observe fluctuations, with a general tendency to decrease through buybacks except for occasional minor increases like in recent years.

Operating of Lancaster Colony (LANC)

Cross Margin is growing?

The criterion assesses if Lancaster Colony's gross margin increased, signifying improved operational efficiency and profitability.

Historical gross margin of Lancaster Colony (LANC)

Lancaster Colony's gross margin increased from 0.2122 in 2022 to 0.2132 in 2023, indicating an enhancement in the company's efficiency. This rise suggests that Lancaster Colony has been successful in managing its production costs better or enhancing its pricing strategy. Comparing to the industry median gross margin of 0.282 in 2023, which is significantly higher, it reveals that Lancaster Colony has room for substantial improvement to match or exceed industry standards.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency at using its assets to generate sales and is critical for assessing operational performance.

Historical asset turnover ratio of Lancaster Colony (LANC)

Comparing the Asset Turnover ratio of Lancaster Colony (LANC) between 2022 and 2023, we see an increase from 1.5298 to 1.6543. This 7.3% improvement indicates enhanced efficiency in utilizing assets to generate revenue. Over the last 20 years, LANC's Asset Turnover has been relatively stable, with values ranging historically around the 1.5 to 1.8 mark, peaking at 2.0645 in 2009.


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