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Last update on 2024-06-07

Modine Manufacturing (MOD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Modine Manufacturing (MOD) achieves a strong Piotroski F-Score of 7/9 in the 2023 financial analysis, signaling solid financial health and investment potential.

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: 7

We're running Modine Manufacturing (MOD) 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?
0
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

Modine Manufacturing (MOD) achieved a Piotroski F-Score of 7 out of 9, demonstrating a strong financial health position. Key highlights include: 1. Profitability: Positive net income of $153.1 million and growing ROA, though still below the industry median. 2. Liquidity: Positive and improved cash flow from operations and reduced leverage. The current ratio is close to industry standards but there's some equity dilution with a 0.57% increase in outstanding shares. 3. Efficiency: Better gross margin and asset turnover rates suggest improved operational efficiency.

Insights for Value Investors Seeking Stable Income

Given the strong Piotroski F-Score of 7, Modine Manufacturing (MOD) shows solid profitability, good liquidity, and improved operational efficiency. However, while the company demonstrates positive trends, especially with reduced leverage and increased ROA, the modest equity dilution and lower-than-industry-average ROA and gross margin suggest areas for improvement. As an investor, MOD is worth considering for its strengths and potential for continued growth, but it’s essential to monitor the noted areas for improvement.

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

Profitability of Modine Manufacturing (MOD)

Company has a positive net income?

Net income is an essential indicator of a company's profitability and is considered a crucial measure in financial analysis. A positive net income signifies that a company is making profits, while a negative net income indicates losses.

Historical Net Income of Modine Manufacturing (MOD)

In 2023, Modine Manufacturing reported a net income of $153.1 million, which is positive. This is a good sign and adds 1 point to the Piotroski score. Over the past 20 years, the company has experienced significant volatility in its net income, including years of substantial losses such as in 2009 and 2021 with -$199.612 million and -$210.7 million respectively. However, the positive trend in recent years, particularly the substantial jump from $85.2 million in 2022 to $153.1 million in 2023, indicates strong performance and improved financial health.

Company has a positive cash flow?

Positive Cash Flow from Operations (CFO) indicates robust liquidity and the company's ability to sustain operations using its internal resources.

Historical Operating Cash Flow of Modine Manufacturing (MOD)

In 2023, Modine Manufacturing (MOD) reported a positive CFO of $107.5 million. This figure not only points to the company's robust liquidity but also its ability to generate enough cash to sustain its operations independently. Over the past 20 years, the company's CFO has displayed some variability, with significant peaks such as $155.7 million in 2005 and lower points like $11.5 million in 2022. The positive cash flow this year follows a challenging period, underscoring a potentially positive turnaround or improved operational efficiency. Therefore, this criterion yields a favorable result, contributing 1 point to the Piotroski score.

Return on Assets (ROA) are growing?

This criterion measures the return on assets (ROA), indicating how efficiently a company is using its assets to generate earnings. An increasing ROA suggests improving asset utilization and profitability.

Historical change in Return on Assets (ROA) of Modine Manufacturing (MOD)

Modine Manufacturing's (MOD) ROA increased from 0.063 in 2022 to 0.1023 in 2023, earning it a point in the Piotroski analysis. This trend is favorable as it demonstrates improved efficiency in asset utilization, contributing positively to the company's profitability. However, it's worth noting that the industry median ROA has been significantly higher, averaging around 0.1912 to 0.259 over the past 20 years, indicating that while MOD is improving, it still lags behind industry standards. In 2023, for instance, the industry median ROA was 0.196, underscoring the need for continued focus on enhancing operational efficiency.

Operating Cashflow are higher than Netincome?

Operating cash flow should be higher than net income.

Historical accruals of Modine Manufacturing (MOD)

For 2023, Modine Manufacturing's operating cash flow was $107.5 million, while its net income was $153.1 million. This indicates that operating cash flow is significantly lower than net income. The trend analysis over the last 20 years shows fluctuations in operating and net income, with periods of both aligning and deviating metrics. In terms of accruals, the analysis suggests moderate fluctuations without extreme spikes, indicating reasonable financial reporting practices. However, due to the recorded figures from 2023, this criterion results in a score of 0, reflecting a negative assessment.

Liquidity of Modine Manufacturing (MOD)

Leverage is declining?

Change in Leverage assesses whether a company's leverage (total debt divided by total assets) is increasing or decreasing. A decrease in leverage is generally seen as positive.

Historical leverage of Modine Manufacturing (MOD)

Between 2022 and 2023, Modine Manufacturing's leverage decreased from 0.2441 to 0.2103. This decline in leverage is a positive signal, indicating that the company is reducing its reliance on debt to finance its operations. Historically, over the past 20 years, Modine Manufacturing has experienced fluctuations in leverage, reaching a peak of 0.2943 in 2020 and maintaining a downward trend since then. Given this context, the decrease in leverage is a good trend, demonstrating improved financial stability. Therefore, for this criterion, Modine Manufacturing earns 1 point.

Current Ratio is growing?

The change in Current Ratio reflects the company's ability to cover its short-term liabilities with its short-term assets and gives insight into liquidity management.

Historical Current Ratio of Modine Manufacturing (MOD)

For Modine Manufacturing (MOD), the Current Ratio rose from 1.5321 in 2022 to 1.6691 in 2023, an increase of approximately 9.0%. This upward trend indicates improved short-term financial health and implies better liquidity management, as MOD now has a higher proportion of short-term assets relative to short-term liabilities. Historically, from the additional data, the industry median for Current Ratio has hovered around 1.7, with the company frequently performing below this benchmark. However, in 2023 the company's Current Ratio is quite close to the industry median of 1.7153, signaling convergence towards industry standards.

Number of shares not diluted?

Change in shares outstanding examines if a company has diluted its shares over the years. A decrease in shares outstanding usually signals confidence from the management in the company's ability to finance itself without resorting to equity dilution, which is beneficial for existing shareholders.

Historical outstanding shares of Modine Manufacturing (MOD)

Modine Manufacturing's outstanding shares have increased from 52,000,000 in 2022 to 52,300,000 in 2023. This trend suggests a 0.57% increase in shares, reflecting potential equity dilution. Over the last 20 years, the trend peaked and troughed, indicating periods where the company had to issue additional shares – notably between 2007 and 2010, and again in 2013 onward. The recent increase aligns with historical behavior, yet it does imply that there is no point added under this criterion for Piotroski analysis. For 2023, the score for shares outstanding is 0.

Operating of Modine Manufacturing (MOD)

Cross Margin is growing?

The change in gross margin represents the efficiency and profitability of a company relative to its cost of goods sold. A higher gross margin indicates better efficiency. This criterion compares FY gross margins.

Historical gross margin of Modine Manufacturing (MOD)

Upon examining Modine Manufacturing (MOD), the gross margin has increased from 0.1509 in 2022 to 0.1695 in 2023, awarding a score of 1 point for this criterion. An increase in gross margin is generally positive as it suggests improved profitability and cost efficiency. This contends that the company's operational performance has strengthened over the past year. Additionally, comparing historical data, MOD's gross margin has fluctuated but shows resilience in staying competitive within the industry. The measure for 2023 not only exceeded the 2022 figure but also stands in proximity to some of its historic highs, demonstrating continued competitive advantage against the industry median of 0.196 in 2023, even though it falls below the industry standard.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It is calculated as Sales divided by Average Total Assets.

Historical asset turnover ratio of Modine Manufacturing (MOD)

The Asset Turnover for Modine Manufacturing (MOD) has increased from 1.5165 in 2022 to 1.5356 in 2023. This rise indicates an improvement in how efficiently the company is utilizing its assets to generate revenue. Historically, Modine Manufacturing has experienced fluctuations in its Asset Turnover, with highs of 1.7423 in 2012 and lows of 1.2681 in 2017. This current increase is a positive sign and warrants an additional point.


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