LCUT 8.65 (+5.36%)
US53222Q1031Furnishings, Fixtures & ApplianceFurnishings, Fixtures & Appliances

Last update on 2024-06-07

Lifetime Brands (LCUT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyzing Lifetime Brands (LCUT) 2023 Piotroski F-Score: 6/9. Explore its financial strength via profitability, liquidity, and efficiency criteria.

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: 6

We're running Lifetime Brands (LCUT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score of 6 for Lifetime Brands (LCUT) indicates a moderately strong financial position. The analysis shows the company has positive cash flow and has also increased its gross margin and asset turnover ratio. However, Lifetime Brands has a negative net income and return on assets, rising leverage, and a decreasing current ratio, which are concerning areas.

Insights for Value Investors Seeking Stable Income

Given the Piotroski score of 6, Lifetime Brands (LCUT) appears to have a moderately strong financial position, especially considering its positive cash flow and gross margin improvements. However, potential investors should be cautious of its negative profitability indicators (net income and ROA), increasing leverage, and decreasing current ratio. It might be worth researching further, keeping in mind both its operational strengths and financial risks.

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

Profitability of Lifetime Brands (LCUT)

Company has a positive net income?

Netincome indicates profitability and impacts firm's valuation.

Historical Net Income of Lifetime Brands (LCUT)

Lifetime Brands (LCUT) reported a negative net income in 2023, amounting to -$8,412,000. This not only falls short of being positive but also suggests profitability concerns. Historically, this is one of the steeper declines in the company’s net income over the last two decades. A quick look back clearly shows a mixed track record, with significant swings, most notably catastrophic in 2008 ($-49,029,000) and 2019 ($-44,415,000). Given this, for our Piotroski score, we assign a score of 0 for this criterion. This trend is concerning, pointing to underlying challenges in maintaining profitability consistently.

Company has a positive cash flow?

The criterion examines whether the company's cash flow from operations is positive, showing if the business generates enough cash to sustain or grow without relying on external financing.

Historical Operating Cash Flow of Lifetime Brands (LCUT)

Lifetime Brands (LCUT) demonstrates a positive cash flow from operations (CFO) of $56,431,000 in 2023, adding 1 point in this dimension of the Piotroski Score. Examining the historical CFO data reveals a largely positive trend throughout the past two decades. For instance, in 2009, the CFO was $63,988,000, and despite some annual fluctuations, it reached relatively significant peaks in recent years, such as $44,813,000 in 2020 and $36,988,000 in 2021. Even during challenging periods, like 2006, when the figure dipped to -$11,451,000, the company managed to recover swiftly in subsequent years. This consistent generation of positive operating cash flow reflects a solid operational footing for Lifetime Brands, contributing positively to both its financial health and valuation.

Return on Assets (ROA) are growing?

ROA (Return on Assets) is a fundamental metric in evaluating a company's profitability and efficiency in using its assets. It's essential as a rising ROA indicates more efficient asset utilization, directly contributing to shareholder value.

Historical change in Return on Assets (ROA) of Lifetime Brands (LCUT)

Comparing the ROA of -0.0121 in 2023 to -0.0079 in 2022, we observe a deterioration in asset efficiency as the ROA has become more negative. In 2022, the ROA was -0.0079, and it declined to -0.0121 in 2023, reflecting a worsened performance and thus awarding 0 points for this criterion. This downtrend implies that Lifetime Brands (LCUT) has struggled to effectively utilize its assets, significantly lagging behind the industry median ROA, which consistently remained positive and above 0.27 over the past 20 years. For instance, in 2023, the industry median ROA was 0.3496, starkly contrasting with LCUT's negative ROA.

Operating Cashflow are higher than Netincome?

This criterion examines if a company's operating cash flow exceeds its net income. Operating cash flow is more reliable as it represents actual inflow and outflow, thus indicating better earnings quality.

Historical accruals of Lifetime Brands (LCUT)

Lifetime Brands (LCUT) exhibits an Operating Cash Flow of $56,431,000 as of 2023, significantly higher than its Net Income of -$8,412,000 for the same fiscal year. This yields a Piotroski score of 1 from this specific criterion. The trend is noteworthy; over 20 years, operating cash flow has generally been higher compared to net income, showing strong cash generation capabilities despite variations in profitability. For instance, in 2009, despite a relatively low Net Income of $2,715,000, the company had a robust Operating Cash Flow of $63,988,000. This consistent disparity suggests operational resilience, indicating efficient cash management and potentially a more sustainable financial footing compared to what net income alone might imply. Hence, the analysis recommends monitoring these cash flows closely for future investment considerations.

Liquidity of Lifetime Brands (LCUT)

Leverage is declining?

Change in leverage compares the level of debt to equity used by the company over time. A decrease in leverage indicates less reliance on debt.

Historical leverage of Lifetime Brands (LCUT)

In 2023, the leverage of Lifetime Brands (LCUT) increased to 0.3991, up from 0.4542 in 2022. This rise in leverage signifies a higher proportion of debt relative to equity, which may increase financial risk. Over the past 20 years, leverage fluctuated significantly, reaching a maximum of 0.5185 in 2019 and a minimum of 0.0043 in 2003, reflecting the company's varying reliance on debt and equity financing. While short-term increases may fund growth, consistent long-term leverage increases could lead to higher interest expenses and reduced financial flexibility, a negative trend for investors.

Current Ratio is growing?

Changes in Current Ratio reflect a company’s ability to cover its short-term liabilities with its short-term assets. An increasing ratio signifies improving liquidity.

Historical Current Ratio of Lifetime Brands (LCUT)

Lifetime Brands (LCUT) saw a decrease in its Current Ratio from 3.0811 in 2022 to 2.4765 in 2023. This reduction indicates a diminishing ability to meet short-term obligations. A closer inspection of the historical data for the last 20 years shows fluctuations. The company's current ratio briefly peaked at 3.7561 in 2018 and has generally remained above the industry median of 1.7959 in 2023. Historically, LCUT has maintained a current ratio above the median, implying better short-term liquidity than its peers. The decrease this year sets the Piotroski score to 0 for this criterion.

Number of shares not diluted?

Outstanding shares are critical to understand the equity structure of Lifetime Brands (LCUT), reflecting corporate actions like issuance or buybacks.

Historical outstanding shares of Lifetime Brands (LCUT)

In 2022, the outstanding shares for Lifetime Brands (LCUT) were documented at 21,558,000, which slightly decreased to 21,195,000 in 2023. This indicates that the company has engaged in share buybacks, reducing the number of shares available in the market. Such a move, often viewed positively, can indicate the company’s strong cash flow position and its intent to return value to shareholders. Also, a steady buyback trend can utilize the company’s excess cash efficiently, ultimately enhancing the value of remaining shares by increasing earnings per share (EPS). Hence, this deserves a commendable point in the Piotroski score.

Operating of Lifetime Brands (LCUT)

Cross Margin is growing?

Change in Gross Margin looks at whether the gross margin has improved from one year to the next.

Historical gross margin of Lifetime Brands (LCUT)

Lifetime Brands (LCUT) experienced an improvement in its gross margin from 0.3577 in 2022 to 0.3708 in 2023. This increase in gross margin is a positive sign, suggesting a better efficiency in managing production costs relative to revenue. Over the last 20 years, LCUT's gross margin has generally remained above the industry median, underscoring its relatively strong position within its sector. Given the data, an increase in gross margin for 2023 aligns with this historical trend.

Asset Turnover Ratio is growing?

The criterion measures change in asset turnover, which indicates efficiency in using assets to generate sales. An increase signals improved performance.

Historical asset turnover ratio of Lifetime Brands (LCUT)

The Asset Turnover for Lifetime Brands (LCUT) has increased from 0.9359 in 2022 to 0.9859 in 2023. This represents an uptick in the company's efficiency in utilizing its assets to generate revenue, garnering it an additional 1 point in the Piotroski score. Over the last two decades, the Asset Turnover ratio shows significant fluctuations, peaking in 2005 at 1.6249 before hitting a low of 0.9359 in 2022. The recent increase to 0.9859 may indicate a positive trend going forward, positioning the company better for future performance.


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