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Last update on 2024-06-05

Mettler-Toledo (MTD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Discover the 2023 Piotroski F-Score analysis of Mettler-Toledo (MTD). Evaluate its financial health and potential investment value through key 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: 5

We're running Mettler-Toledo (MTD) 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?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

Mettler-Toledo (MTD) has been analyzed using the Piotroski F-Score, scoring 5 out of 9. Here are the key findings: 1. Profitability: - Positive net income: $788.78 million in 2023. - Positive cash flow: $965.87 million in 2023. - ROA has decreased. - Operating Cash Flow is higher than Net Income. 2. Liquidity: - Leverage increased slightly from 0.5465 to 0.5628. - Current Ratio decreased from 1.1981 to 1.0416. - Number of Outstanding Shares decreased by ~2.86%. 3. Operating Efficiency: - Gross Margin increased slightly. - Asset Turnover Ratio decreased. The company shows strong profitability and reasonable efficiency but has some liquidity concerns.

Insights for Value Investors Seeking Stable Income

Overall, with a Piotroski Score of 5, Mettler-Toledo (MTD) is a moderately attractive investment. The company demonstrates strength in profitability and efficiency but exhibits some concerns in liquidity management. It's worth considering for those willing to delve deeper into the specifics of its financial health and operational strategies. Further evaluation of recent trends and comparison with industry peers is recommended before making any investment decisions.

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

Profitability of Mettler-Toledo (MTD)

Company has a positive net income?

The criterion checks whether the net income for 2023 is positive; a positive net income would contribute 1 point to the score, while a negative one would not.

Historical Net Income of Mettler-Toledo (MTD)

Reviewing the net income for Mettler-Toledo (MTD) for the year 2023, we note a positive figure of $788.78 million. This consistent trend of positive net income over the past 20 years signifies robust financial health and sustainability. For 2023, the positive net income warrants the addition of 1 point to the Piotroski Score. Despite the slight decrease from the previous year (2022), where net income was $872.50 million, MTD has showcased a generally upward trajectory in profitability since 2003. This upward trend reinforces investor confidence in the company's operational efficacy and revenue generation capabilities.

Company has a positive cash flow?

The criterion assesses whether the company generates sufficient operating cash flow to sustain its operations, indicating financial health and potential for growth.

Historical Operating Cash Flow of Mettler-Toledo (MTD)

In 2023, Mettler-Toledo reported a Cash Flow from Operations (CFO) of $965,874,000. The CFO being positive is a favorable indicator and thus earns 1 point in the Piotroski analysis. Over the past 20 years, Mettler-Toledo has consistently generated positive operating cash flow, starting from $117,231,000 in 2003 to $965,874,000 in 2023. This continuous growth in operating cash flow showcases the company's robust financial management and its capacity to generate ample liquidity from core business activities. The steady increase in CFO is a testament to the firm’s operational efficiency and success in translating revenue into actual cash profits, highlighting a strong financial foundation and ensuring sustainability.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures how efficiently a company converts its assets into profits. It is crucial as it indicates the company's profitability and asset utilization.

Historical change in Return on Assets (ROA) of Mettler-Toledo (MTD)

The ROA for Mettler-Toledo (MTD) decreased from 0.2559 in 2022 to 0.2304 in 2023. The negative change indicates a decline in the company's ability to use its assets to generate profits, resulting in 0 points for this criterion. Historically, MTD's ROA reached a peak in prior years, showcasing higher efficiency, yet fell below the industry median of 0.504 in 2023. The downward trend may signal potential challenges in maintaining profitability.

Operating Cashflow are higher than Netincome?

Operating cash flow (OCF) being higher than Net Income is a strong indicator of the quality of a company’s earnings. It suggests that the company is able to generate sufficient cash from its core business operations without relying on external financial sources or accounting adjustments. This criterion is important as it checks for the genuineness of reported earnings and the company's efficiency in cash generation, which is vital for meeting obligations and funding growth.

Historical accruals of Mettler-Toledo (MTD)

For 2023, Mettler-Toledo (MTD) reported an Operating Cash Flow (OCF) of $965.874 million, while the Net Income stood at $788.778 million. The OCF is substantially higher than the Net Income, resulting in a score of 1 point for this criterion. Considering historical data, MTD has consistently shown higher operating cash flows compared to net income over the last two decades, demonstrating strong operational efficiency. This consistency is favorable, suggesting that MTD’s earnings quality is robust, indicating the company's reliable ability to generate cash, fending off liquidity issues and supporting continued growth. Hence, this trend is good.

Liquidity of Mettler-Toledo (MTD)

Leverage is declining?

Change in Leverage measures the difference in a company's leverage ratio between two periods. It shows whether the company is increasing or decreasing its debt burden relative to its equity.

Historical leverage of Mettler-Toledo (MTD)

For Mettler-Toledo in 2022, the Leverage was 0.5465, whereas in 2023, it increased slightly to 0.5628. This means the leverage has increased in 2023, reflecting a rise in the company’s debt relative to its equity. The trend in this dataset over the last 20 years portrays substantial variability with leverage fluctuating significantly, reaching as low as 0.1184 in 2009 and climbing steadily to 0.5628 in 2023. Given the increase in leverage this year, it does not earn the point for the Piotroski F Score.

Current Ratio is growing?

Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. It is important to assess short-term financial stability.

Historical Current Ratio of Mettler-Toledo (MTD)

In 2023, Mettler-Toledo's Current Ratio decreased to 1.0416 from 1.1981 in 2022. This indicates a reduced capability to cover short-term liabilities with short-term assets. Given the declining trend, the criterion scores 0 points. This trend is concerning when compared to the industry median of 2.3682, demonstrating weaker liquidity.

Number of shares not diluted?

Outstanding Shares measure the total shares of a company that are held by shareholders, including restricted shares and company insiders. A decrease indicates that the company is likely buying back shares, which can signal strong financial health.

Historical outstanding shares of Mettler-Toledo (MTD)

For Mettler-Toledo (MTD), the Outstanding Shares decreased from 22,491,790 in 2022 to 21,848,122 in 2023, a reduction of approximately 2.86%. This is a positive trend, reflecting that the company may be engaging in share buybacks, which often indicates confidence in future performance. Over the last 20 years, there has been a consistent decrease in shares, indicating a long-term strategy of buying back shares, often a sign of robust financial health and a commitment to returning value to shareholders. Consequently, this criterion scores a full point.

Operating of Mettler-Toledo (MTD)

Cross Margin is growing?

Change in Gross Margin is a crucial measure in the Piotroski score that reflects a company's efficiency in producing its goods and services. Higher gross margins are indicative of better production efficiency or pricing power.

Historical gross margin of Mettler-Toledo (MTD)

The gross margin of Mettler-Toledo (MTD) has increased from 0.5888 in 2022 to 0.5916 in 2023. This increase suggests improved efficiency and possibly stronger pricing strategies. Over the past 20 years, MTD's gross margin has experienced a steady increase, moving from 0.4739 in 2003 to 0.5916 in 2023. Comparatively, the industry median gross margin has shown fluctuations with a mix of ups and downs, currently standing at 0.503 in 2023. MTD's gross margin consistently surpasses the industry median, highlighting its superior operational efficiencies and market position. Thus, MTD receives a score of 1 for this criterion, indicating a positive trend in its financial health.

Asset Turnover Ratio is growing?

Asset turnover measures a company's efficiency in using its assets to generate sales revenue. An increasing asset turnover ratio indicates better performance and effective use of assets.

Historical asset turnover ratio of Mettler-Toledo (MTD)

Comparing the asset turnover ratios, Mettler-Toledo (MTD) shows a decrease from 1.1496 in 2022 to 1.1064 in 2023. This trend is unfavorable as it suggests the company is becoming less efficient in utilizing its assets to generate sales. Historically, MTD's asset turnover has ranged between 0.9413 (2005) and 1.2108 (2021). Given the recent decline after a peak in 2021, this could reflect underlying issues impacting operational efficiency.


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