Last update on 2024-06-04

MTU Aero Engines (MTX.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Analyze MTU Aero Engines (MTX.DE) 2023 Piotroski F-Score: 4/9. Evaluates profitability, liquidity and operational efficiency for investment insights.

Short Analysis - Piotroski Score: 4

We're running MTU Aero Engines (MTX.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score for MTU Aero Engines (MTX.DE) is 4 out of 9. The score is calculated based on profitability, liquidity, and operating efficiency criteria. Key positive factors include positive cash flow from operations, a reduction in financial leverage, a higher cash flow than net income, and no share dilution. However, the company has a negative net income, decreasing return on assets and gross margin, growing operating inefficiency, and a decline in current ratio. Overall, these mixed results suggest that MTU Aero Engines has flaws in its financial health and efficiency, despite a few strong points.

Insights for Value Investors Seeking Stable Income

Given the Piotroski score of 4, which is below the average threshold of 5, MTU Aero Engines may not be the best option for conservative investors looking for strong, undervalued stocks. The negative net income and declining efficiency ratios are significant red flags. If you're seeking potential investments, it might be worth looking at other companies with higher Piotroski scores and stronger financial health.

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

Profitability of MTU Aero Engines (MTX.DE)

Company has a positive net income?

Net income is a company's total earnings or profit, which indicates financial health and profitability.

The net income for MTU Aero Engines in 2023 is -102,000,000, which is negative, leading to a score of 0 for this criterion. Historically, the net income has shown strong performance in the past 20 years, peaking at 478,100,000 in 2019. However, the significant drop in 2023 indicates potential issues, possibly influenced by macroeconomic factors or industry-specific challenges. This negative trend is concerning and highlights the need for a deeper analysis into the causes and potential financial recovery strategies for the company.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the money a company generates from its regular business operations, indicating liquidity and solvency.

For the year 2023, MTU Aero Engines (MTX.DE) reported a positive Cash Flow from Operations (CFO) of €777,000,000. This not only earns the company 1 point under the Piotroski criteria but also signals strong operational health and robust cash generation capability. Analyzing the historical data, MTU Aero Engines has shown a consistent upward trend in its CFO over the past two decades. For instance, comparing the €72,900,000 in 2004 with the current €777,000,000 in 2023 represents an increase of more than tenfold. This trend underscores the company's effective management and profitability, highlighting its steady growth in operational efficiency.

Return on Assets (ROA) are growing?

Return on Assets (ROA) formula is used as an indicator to gauge a company's profit generating capability relative to its total asset value over a given period. It shows how efficiently a company uses its assets to achieve profitability, vital for stakeholders to evaluate management's effectiveness.

In 2022, MTU Aero Engines reported an ROA of 0.0378. By 2023, that figure had declined to -0.0105, indicating a decrease in asset usage efficiency. This fall is significant, given the steel industry median ROA has consistently been above 0.2 over the past two decades. A negative ROA signals that MTU Aerospace has deficiencies in generating profit from its assets against other industry players. With this drop, the scoring metric for this criterion would be set to 0, reflective of the adverse trend in asset efficiency.

Operating Cashflow are higher than Netincome?

Operating Cash Flow is higher than Net Income.

In 2023, MTU Aero Engines reported an Operating Cash Flow of €777 million, significantly surpassing its Net Income of -€102 million. This positive disparity, where cash flow exceeds net income, adds 1 point in the Piotroski Analysis. It's a good sign as it indicates strong cash generation capabilities, helped potentially by effective working capital management and profitability at an operational level.

Liquidity of MTU Aero Engines (MTX.DE)

Leverage is declining?

Change in leverage ratios is assessed to understand shifts in financial risk and capital structure.

In 2022, MTU Aero Engines' leverage ratio was 0.1289, which increased to 0.1196 in 2023. This signifies that the company has reduced its financial leverage, potentially lowering its financial risk. This positive trend from 0.1289 to 0.1196 is good. Thus, 1 point is added here for the Piotroski score.

Current Ratio is growing?

This criterion measures the company's ability to cover its short-term obligations with short-term assets. A higher current ratio indicates better liquidity and financial health, making it essential to monitor these trends for MTU Aero Engines.

The Current Ratio for MTU Aero Engines (MTX.DE) has decreased from 1.3457 in 2022 to 1.1167 in 2023. This represents a decline in the company's liquidity position. Despite the decrease, the 2023 ratio is still above several historical figures, such as 0.9854 in 2008 and 0.8844 in 2009, indicating generally stable liquidity over the long term. However, when compared to the industry median current ratio, which stood at 2.1805 in 2023, MTU Aero Engines appears to be lagging considerably behind its industry peers, signaling potential concerns. Consequently, no point is added for this criterion.

Number of shares not diluted?

Change in shares outstanding refers to the difference in the number of shares that are currently held by shareholders relative to a previous time period. It can signal how a company is financing its operations.

Comparing the numbers: in 2022, the outstanding shares were 53,366,518, while in 2023, the outstanding shares dropped to 0. Since outstanding shares have decreased significantly over the year, this trend can be considered good under the Piotroski criteria; hence, MTU Aero Engines deserves 1 point. Historically, MTX showed increments and decrements in shares, which underlines this reduction is not a common trend.

Operating of MTU Aero Engines (MTX.DE)

Cross Margin is growing?

Comparison of gross margin figures between years highlights a company's ability to manage production costs relative to revenue.

For MTU Aero Engines (MTX.DE), the gross margin has dramatically decreased from 0.1604 in 2022 to 0.0218 in 2023. This sharp decline signifies a considerable increase in production costs relative to revenue, yielding a negative outlook. Over the last 20 years, MTU's gross margin has fluctuated but generally remained below the industry median. The 2023 figure is unprecedentedly low, indicating operational difficulties. Given this decline, the gross margin score is set to 0, signifying a need for cost control and efficiency improvements.

Asset Turnover Ratio is growing?

Change in Asset Turnover examines whether a company is generating more sales per unit of assets. This metric is crucial for assessing operational efficiency and profitability.

Examining the Asset Turnover of MTU Aero Engines (MTX.DE) reveals that it declined from 0.608 in 2022 to 0.552 in 2023. Consequently, based on this metric, MTU Aero Engines scores 0 points. This decrease suggests that the company's efficiency in utilizing its assets to generate sales has worsened, a negative sign for potential investors. Observing the long-term trend, the Asset Turnover has generally been declining, with a notable drop beginning around 2016. While it showed some recovery during 2021-2022, the decline in 2023 reaffirms concerns about its operational efficiency.