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Last update on 2024-06-07

Molina Healthcare (MOH) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Explore Molina Healthcare's (MOH) 2023 Piotroski F-Score Analysis scoring 7/9. Evaluate profitability, liquidity, leverage, 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.
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Short Analysis - Piotroski Score: 7

We're running Molina Healthcare (MOH) 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?
0

Molina Healthcare has a Piotroski F-Score of 7 out of 9, indicating a strong financial position. The company demonstrated profitability with a net income of $1.091 billion for 2023 and positive cash flow from operations of $1.662 billion. The Return on Assets (ROA) increased, and Operating Cash Flow was higher than net income, both suggesting efficient management and strong operational health. The company's leverage ratio slightly increased, and the Current Ratio, showing liquidity, improved to 1.5355. However, there was a minor increase in outstanding shares, suggesting slight dilution. The Gross Margin improved, though still lagging behind industry norms, and the Asset Turnover Ratio decreased, indicating a need for better asset utilization.

Insights for Value Investors Seeking Stable Income

Given Molina Healthcare's strong Piotroski F-Score and their clear improvements in several key financial metrics, it seems like a solid stock worth looking into for those interested in robust financial health and stability. However, potential investors should watch out for the slight increases in leverage and share dilution, and the need for better asset utilization. Overall, Molina Healthcare appears to be a comparatively strong investment option with growth potential.

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

Profitability of Molina Healthcare (MOH)

Company has a positive net income?

Net income represents the company's profit after all expenses and taxes have been deducted from total revenue. It is a key indicator of financial health and profitability.

Historical Net Income of Molina Healthcare (MOH)

For 2023, Molina Healthcare (MOH) reported a net income of $1,091,000,000, which is positive. This is a strong indication of profitability, especially when considering that the company managed to significantly improve from past years - in 2017, for instance, it stood at a higher net income but a massive negative in 2015. For additional context, in the last decade apart from 2015, Molina Healthcare consistently posted positive net incomes. Therefore, MOH earns 1 point for having a positive net income in 2023, demonstrating its stable financial performance.

Company has a positive cash flow?

Cash flow from operations (CFO) indicates whether a company is able to generate sufficient positive cash flow to maintain and grow its operations, which is a key measure of financial health.

Historical Operating Cash Flow of Molina Healthcare (MOH)

In 2023, Molina Healthcare (MOH) reported a CFO of $1.662 billion, which is positive. This is a crucial indicator of the company’s ability to generate liquid assets from its core business operations. Historically, the company has seen fluctuations in its CFO, including a significant dip in 2018 where CFO turned negative at -$314 million. However, it has recovered strongly over the years, showing resilience and effective financial management. The current positive CFO adds 1 point in Piotroski’s F-Score evaluation, suggesting a favorable position in terms of liquidity and operating efficiency.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is assessed to determine if a company is effectively managing its assets to generate earnings. A higher ROA means more efficient utilization of the company's assets, a key indicator of profitability.

Historical change in Return on Assets (ROA) of Molina Healthcare (MOH)

The ROA for Molina Healthcare increased from 0.0646 in 2022 to 0.0802 in 2023. This improvement adds 1 point to the Piotroski score. This positive trend indicates greater efficiency in using assets to generate earnings. Comparing with the industry median ROA, which decreased from 0.1487 in 2022 to 0.1124 in 2023, Molina Healthcare's performance is favorable. Despite the industry facing pressure, Molina Healthcare managed to outperform its peers, showcasing robust management effectiveness.

Operating Cashflow are higher than Netincome?

This criterion measures whether a company generates more cash from its operations than its accounting profits. It is essential because it indicates that profits are not just a result of accounting practices but are backed by real cash flows.

Historical accruals of Molina Healthcare (MOH)

In the case of Molina Healthcare (MOH), the Operating Cash Flow for 2023 stood at $1.662 billion, while the Net Income was $1.091 billion. This paints a favorable picture showing that the company is generating more cash than its accounting profits, earning 1 point. This is indicative of robust health in current operations. Historical data also supports this trend: in several years (e.g., 2012, 2014, and 2020), operating cash flow was substantially higher than net income. However, it is noteworthy that there have been some anomalies, such as in 2018, when operating cash flow showed a negative value. Overall, the ability to consistently generate operating cash flows higher than net income underscores sound financial health and operational excellence.

Liquidity of Molina Healthcare (MOH)

Leverage is declining?

Leverage measures the amount of debt used to finance a company’s operations. Low leverage is often seen as a signal of lower risk.

Historical leverage of Molina Healthcare (MOH)

The leverage ratio for Molina Healthcare increased from 0.1942 in 2022 to 0.1602 in 2023, suggesting higher debt utilization. The historical data shows variability in leverage, but the recent trend indicates an uptick, which isn't favorable for lower-risk assessment. Historical leverage fluctuated between 0 and 0.2467 over the last 20 years, peaking in 2020.

Current Ratio is growing?

The Current Ratio is a measure of a company's ability to cover its short-term liabilities with its short-term assets. It is an essential liquidity metric.

Historical Current Ratio of Molina Healthcare (MOH)

Molina Healthcare's Current Ratio increased from 1.471 in 2022 to 1.5355 in 2023. This marginal rise suggests a better liquidity position and a 1 point increment in the Piotroski score. Reviewing the 20-year data, the ratio has shown fluctuations with a decreasing trend, especially from the mid-2000s. Comparing with the industry median for 2023, which stands lower at 1.11, Molina Healthcare's current ratio showcases its relative strength in maintaining liquidity above industry norms.

Number of shares not diluted?

Change in Shares Outstanding involves comparing the current year's outstanding shares with the previous year's. A decrease in outstanding shares can indicate strategic buybacks or strong insider confidence.

Historical outstanding shares of Molina Healthcare (MOH)

As of 2023, Molina Healthcare's outstanding shares have increased to 58,300,000 from 57,800,000 in 2022. This means that outstanding shares have risen by 0.87%, garnering 0 points in the Piotroski Score. Typically, a decrease in shares is considered favorable, showing that the company is possibly buying back shares, adding value to each remaining share. An increase might suggest dilution, where the company is issuing more shares. However, it is not significantly high enough to cause concerns regarding dilution potential.

Operating of Molina Healthcare (MOH)

Cross Margin is growing?

Gross Margin measures the degree to which a company makes money beyond its cost of goods sold. It is essential for evaluating the efficiency and profitability.

Historical gross margin of Molina Healthcare (MOH)

Molina Healthcare's Gross Margin improved from 0.1228 in 2022 to 0.1272 in 2023, indicating stronger profitability. Over the past 20 years, Molina's margins have fluctuated but mostly remained below the industry median. The upward trend this year is positive and adds 1 point to their Piotroski score, but it still falls short compared to the industry's median of 0.1124. This improvement suggests effective cost management and potential growth in operational efficiency.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency in using its assets to generate revenue.

Historical asset turnover ratio of Molina Healthcare (MOH)

The Asset Turnover for Molina Healthcare decreased from 2.6077 in 2022 to 2.5047 in 2023. This means the ratio has dropped, signaling a 0.103 point decrease. Efficient revenue generation relative to assets has slightly deteriorated. Over 20 years, the Asset Turnover trend shows consistency, with some fluctuations. For instance, from 2009 onwards, the ratio peaked at 3.3586 in 2012 and saw minor dips and rises thereafter. This decrease in 2023, however, points to a need for optimization of asset utilization moving forward. The point for this criterion is 0.


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