MMSI 87.06 (+1.65%)
US5898891040Medical Devices & InstrumentsMedical Instruments & Supplies

Last update on 2024-06-07

Merit Medical Systems (MMSI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Piotroski F-Score Analysis of Merit Medical Systems (MMSI) for 2023 reveals a final score of 6/9, evaluating its 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.
Learn more...

Short Analysis - Piotroski Score: 6

We're running Merit Medical Systems (MMSI) 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?
0
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

Merit Medical Systems has a Piotroski F-Score of 6 out of 9, indicating a relatively strong but not outstanding financial position. The company shows positive trends in profitability, with a significant net income turnaround and strong operating cash flow. Liquidity indicators are mixed; while the current ratio has improved, leverage has increased, signaling higher debt levels. Additionally, the increase in outstanding shares is a potential negative for shareholder value. Efficiency metrics are also mixed, with an improved gross margin but a decline in asset turnover, indicating reduced efficiency in using assets to generate sales.

Insights for Value Investors Seeking Stable Income

Merit Medical Systems (MMSI) seems to have some strong points, such as profitability and cash flow generation. However, there are areas of concern, particularly around increasing leverage and declining asset efficiency. If you're an investor, it might be worth further investigation, particularly around how the company plans to manage its debt and improve asset utilization. Proceed with cautious optimism.

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

Profitability of Merit Medical Systems (MMSI)

Company has a positive net income?

Net income is important as it measures a company's profitability. Positive net income indicates a profitable company.

Historical Net Income of Merit Medical Systems (MMSI)

For Merit Medical Systems (MMSI), the net income for 2023 stands at $94,411,000, which is positive. This trend is promising for the company, as it indicates profitability. Additionally, when analyzing the net income over the past 20 years, we see fluctuations but an overall upward trend. Notably, there is a significant improvement from -$9,843,000 in 2020 to $94,411,000 in 2023. This represents a remarkable turnaround and highlights the company's ability to generate substantial profits. Therefore, Merit Medical Systems adds 1 point for having a positive net income in 2023.

Company has a positive cash flow?

Assessing Cash Flow from Operations (CFO) is vital as it shows the company’s ability to generate enough cash to maintain or grow operations. Positive CFO indicates that the core business operations are yielding financial benefits.

Historical Operating Cash Flow of Merit Medical Systems (MMSI)

For 2023, Merit Medical Systems (MMSI) reported a CFO of $145,151,000, which is positive. This indicates a robust generation of cash from its core operations. In fact, examining the last 20 years, MMSI has consistently maintained a positive cash flow from operations. Starting from $24,837,398 in 2003, there has been an upward trajectory with minor fluctuations up until 2023. This positive trend in CFO signifies the company’s strong operational performance and its ability to generate sufficient cash, earning it 1 point in the Piotroski Analysis.

Return on Assets (ROA) are growing?

Change in ROA for Merit Medical Systems (MMSI) refers to the difference in Return on Assets between two periods, indicating the trend in the company's efficiency in using its assets to generate earnings.

Historical change in Return on Assets (ROA) of Merit Medical Systems (MMSI)

The ROA for Merit Medical Systems increased from 0.045 in 2022 to 0.0473 in 2023, marking an improvement of 0.0023. This increase is a positive indicator, suggesting that the company is becoming more efficient in its asset utilization. Given the positive change in ROA, it would be appropriate to add 1 point for this criterion. However, when compared to the industry's median ROA over the last 20 years, which is significantly higher (ranging from 0.514 to 0.5747), MMSI's ROA still lags considerably behind. This underperformance relative to the industry median highlights an area where the company has ample room for improvement. The company's operating cash flow over the last 20 years has shown a generally upward trend, indicating satisfactory operational performance that needs to translate more effectively into asset utilization.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income (OCF > NI) measures the quality of a company's earnings. It is important because it indicates that the company is generating sufficient cash from its core operations to cover its net income. This is considered a positive indicator of financial health and efficiency in cash management.

Historical accruals of Merit Medical Systems (MMSI)

Based on the provided data, Merit Medical Systems (MMSI) has an Operating Cash Flow of $145,151,000 and a Net Income of $94,411,000 in 2023. The Operating Cash Flow is indeed higher than the Net Income, resulting in a score of 1 for this criterion. This trend is positive because it suggests that the company is effectively converting its earnings into cash, enhancing its ability to invest, pay down debt, or return value to shareholders. When evaluating the historical data, Merit Medical Systems has shown a consistent ability to generate higher cash flow from operations relative to net income. For instance, in 2020, the Operating Cash Flow was $165,270,000, significantly higher than the Net Income of -$9,843,000, highlighting the company's resilience even in less profitable years.

Liquidity of Merit Medical Systems (MMSI)

Leverage is declining?

Change in Leverage criterion is crucial to evaluate if the company is decreasing its debt levels relative to equity, signaling financial stability.

Historical leverage of Merit Medical Systems (MMSI)

Merit Medical Systems (MMSI) has seen an increase in leverage from 0.1481 in 2022 to 0.3781 in 2023. This is a substantial increase in leverage, suggesting that the company has taken on more debt relative to its equity. Over the last 20 years, leverage levels have fluctuated, but this recent spike is the highest in the dataset. Such an increase could indicate a higher risk profile as the company relies more on debt financing, and this criterion would receive a score of 0.

Current Ratio is growing?

Explain the criterion for Merit Medical Systems (MMSI) and why it is important to consider

Historical Current Ratio of Merit Medical Systems (MMSI)

The Current Ratio is a key financial metric used to assess a company's liquidity by comparing its current assets to its current liabilities. This ratio is important because it provides insights into a company's ability to meet its short-term obligations. For Merit Medical Systems, an increase in the Current Ratio from 2.3979 in 2022 to 5.4453 in 2023 indicates improved liquidity. Data from the last 20 years shows fluctuating current ratios, but the significant rise in 2023 suggests better financial health compared to the industry median of 2.3418.

Number of shares not diluted?

Change in Shares Outstanding indicates whether a company is issuing more shares to raise capital or buying back shares.

Historical outstanding shares of Merit Medical Systems (MMSI)

Merit Medical Systems (MMSI) saw an increase in Outstanding Shares from 56,806,000 in 2022 to 57,593,000 in 2023, reflecting an addition of 787,000 shares. This trend is viewed unfavorably in the Piotroski Analyses, as a decrease in outstanding shares would signify greater shareholder value through buybacks. Thus, 0 points are awarded for this criterion. The increase seemingly follows a historical pattern shown over the last 20 years, where shares have generally trended upward, moving from 33,792,455 in 2003 to the current figures. This pattern implies that MMSI often uses equity financing for growth or operational needs.

Operating of Merit Medical Systems (MMSI)

Cross Margin is growing?

Change in Gross Margin assesses the company's core profitability. An increase suggests stronger control over production costs and better revenue conversion.

Historical gross margin of Merit Medical Systems (MMSI)

Merit Medical Systems' Gross Margin rose from 0.451 in 2022 to 0.4644 in 2023, a beneficial increase. This year-on-year enhancement indicates improved efficiency and cost management within the company, demonstrating its increasing effectiveness in running operations. Over the last two decades, the company's Gross Margin has generally trended upwards, though it remains below the industry median. Nevertheless, continuing this positive trend could be seen as a competitive advantage.

Asset Turnover Ratio is growing?

Analyze the change in Asset Turnover for Merit Medical Systems and its impact.

Historical asset turnover ratio of Merit Medical Systems (MMSI)

For Merit Medical Systems (MMSI), the Asset Turnover ratio has decreased from 0.695 in 2022 to 0.6304 in 2023. The Asset Turnover ratio is a key metric that measures the efficiency of a company's use of its assets in generating sales. A decrease in this ratio implies that the company's efficiency in generating sales from its assets has diminished year-over-year, which is a negative trend for this criterion. Comparing to historical data spanning the last 20 years, the Asset Turnover ratio shows that the metric has generally suffered a downward trend from a high of 1.465 in 2003 to its current level of 0.6304 in 2023. This long-term decline raises concerns regarding the firm's asset utilization efficiency.


Obligatory risk notice

We would like to point out that the contents of this website are for general information purposes only and do not constitute recommendations for the purchase or sale of specific financial instruments, and therefore do not constitute investment advice. In particular, marketstorylabs.com and its creators cannot assess the extent to which information / recommendations made on the pages correspond to your investment objectives, your risk tolerance and your ability to bear losses. Therefore, if you make any investment decisions based on information on the site, you do so solely on your own responsibility and at your own risk. This in turn means that neither marketstorylabs.com nor its creators are liable for any losses incurred as a result of investment decisions based on the information on the marketstorylabs.com website or other media used.