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Last update on 2024-06-07

Neurocrine Biosciences (NBIX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Neurocrine Biosciences (NBIX) scored 6/9 in the 2023 Piotroski F-Score, reflecting its financial strength. Detailed analysis covers profitability, liquidity, and 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: 6

We're running Neurocrine Biosciences (NBIX) 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?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a rating from 0 to 9 evaluating a company’s financial health based on profitability, liquidity, and operating efficiency. Neurocrine Biosciences (NBIX) scores a 6, suggesting a relatively robust financial position. This score comprises positive net income, positive cash flow from operations, increasing Return on Assets (ROA), and higher operating cash flow than net income. However, it falls short due to increasing leverage, a decreasing current ratio, and a declining gross margin. The share count has decreased, which is favorable for investors, and the asset turnover ratio shows stable improvement.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Neurocrine Biosciences (NBIX) appears to be a reasonably strong investment opportunity with a score of 6. Investors might find it attractive due to positive profitability measures and operational cash flows. Nevertheless, caution is advised due to the firm's increased leverage and lower current ratio, which indicate potential liquidity risks. Given the mixed financial indicators, it could be worth a more detailed examination before making an investment decision.

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

Profitability of Neurocrine Biosciences (NBIX)

Company has a positive net income?

Net income determines whether a company is profitable. Positive net income adds to shareholder value, while negative net income erodes it.

Historical Net Income of Neurocrine Biosciences (NBIX)

The net income for Neurocrine Biosciences (NBIX) in 2023 is $249.7 million, which is positive. Therefore, according to the Piotroski Analysis criterion, this earns 1 point. Historically, this is a significant improvement compared to most of the past 20 years, where the company frequently reported negative net income. For instance, in 2007 and 2008, the net income was -$107.2 million and -$207.3 million, respectively. More recently, the trends have been more favorable, with positive net incomes being reported since 2020. This consistent improvement underscores a robust financial trajectory.

Company has a positive cash flow?

Explain the criterion for Neurocrine Biosciences (NBIX) and why it is important to consider

Historical Operating Cash Flow of Neurocrine Biosciences (NBIX)

Positive cash flow from operations (CFO) is crucial as it indicates that a company is generating sufficient revenue from its core business activities to fund its operations, without relying on external financing. This is a significant indicator of financial health and operational efficiency.

Return on Assets (ROA) are growing?

Change in ROA refers to the variation in Return on Assets (ROA) between two periods. ROA measures a company's profitability relative to its total assets, indicating how efficiently it generates earnings.

Historical change in Return on Assets (ROA) of Neurocrine Biosciences (NBIX)

Neurocrine Biosciences exhibited a Return on Assets (ROA) increase from 0.0696 in 2022 to 0.0889 in 2023. This positive growth, by approximately 28%, signifies enhanced efficiency in generating earnings from its assets. Evaluating the longer horizon, the company has enhanced its operating cash flow progressively, particularly after 2014, moving from -$106.18 million in 2016 to an impressive $389.9 million in 2023. Though NBIX's ROA is significantly lower than the industry median of 0.4518 in 2023, the upward trend still merits a favorable outlook on its own merits, yielding 1 Piotroski point for this criterion.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income

Historical accruals of Neurocrine Biosciences (NBIX)

In FY 2023, Neurocrine Biosciences (NBIX) reported an operating cash flow of $389.9 million, significantly surpassing its net income of $249.7 million. This positive disparity implies robust earnings quality and efficient cash management. Over the last two decades, the firm predominantly faced negative cash flows and net incomes. Nevertheless, recent trends have shown a substantial uptick. This year’s positive comparison indicates the firm’s growing operational efficiency, meriting the addition of 1 point in the Piotroski framework.

Liquidity of Neurocrine Biosciences (NBIX)

Leverage is declining?

Leverage refers to the use of borrowed funds to finance the company's operations. Observing its trend helps assess company risk.

Historical leverage of Neurocrine Biosciences (NBIX)

In 2023, Neurocrine Biosciences (NBIX) shows an increased leverage of 0.0794 compared to 0.0395 in 2022. This higher leverage indicates the company is relying more on debt, which can signify increased risk. Over the past two decades, NBIX's leverage peaked in 2007 at 0.3931, later achieving zero leverage for a long stretch. This fluctuation suggests periods of varying financial strategy and debt dependency. Given the recent rise, one must be cautious about added financial risk amid potential benefits from leveraged growth strategies. Therefore, under the Piotroski analysis, this results in 0 points on the leverage front.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets. It is an indicator of financial stability.

Historical Current Ratio of Neurocrine Biosciences (NBIX)

In 2023, Neurocrine Biosciences (NBIX) reported a current ratio of 2.4542, down from 2.7032 in 2022. This represents a decrease in the current ratio, signaling a slight reduction in the company's liquidity position. Historically, NBIX has maintained varying levels of current ratios, with peaks exceeding 12 (e.g., 2012-2014) and lows below the industry's median in more recent times. The industry median for 2023 stands at 5.7831, making NBIX's current ratio notably lower, which indicates that the company is less liquid than its peers. Therefore, no point is added for the current ratio in the Piotroski score.

Number of shares not diluted?

Change in Shares Outstanding refers to the difference in the number of shares a company has issued that are currently held by shareholders. It is crucial because it can affect earnings per share (EPS) and investor ownership dilution.

Historical outstanding shares of Neurocrine Biosciences (NBIX)

In 2022, Neurocrine Biosciences had 95,800,000 outstanding shares. By 2023, the number of outstanding shares dropped significantly to 0. A decrease in outstanding shares implies the company may have initiated buybacks or other corporate activities to reduce share count, which is generally favorable for existing shareholders as it can lead to higher EPS and reduced dilution. Therefore, Neurocrine Biosciences earns a score of 1 for this criterion, indicating a positive trend.

Operating of Neurocrine Biosciences (NBIX)

Cross Margin is growing?

Gross Margin is a company's total sales revenue minus its cost of goods sold (COGS), divided by its total sales revenue, expressed as a percentage. It represents the portion of sales revenue that a company retains after incurring the direct costs associated with producing its goods and services. This metric is crucial in assessing a company's financial health and operational efficiency.

Historical gross margin of Neurocrine Biosciences (NBIX)

In 2023, Neurocrine Biosciences (NBIX) reported a Gross Margin of 0.979, down from 0.9844 in 2022. This decline in Gross Margin indicates that a smaller portion of revenue is being retained after covering the direct costs, suggesting potentially higher production costs, reductions in pricing power, or inefficiencies. Over the last two decades, NBIX's Gross Margin has remained fairly high compared to the industry median, peaking at 1 in several years, noticeably above the current industry median of 0.4518 in 2023. However, the steady decrease over recent years (from 0.9906 in 2019 to 0.979 in 2023) is a concern and highlights the need for NBIX to address its cost structures or pricing strategy to prevent further erosion. Consequently, NBIX scores 0 points for this criterion.

Asset Turnover Ratio is growing?

The criterion assesses whether the firm is improving its sales efficiency regarding asset utilization.

Historical asset turnover ratio of Neurocrine Biosciences (NBIX)

In 2023, Neurocrine Biosciences (NBIX) reported an Asset Turnover of 0.6716 compared to the Asset Turnover of 0.6704 in 2022. This marginal increase suggests a positively stable utilization and efficiency of the company’s assets in generating revenue. Given an increment, albeit small, this trend assigns 1 point to this criterion. Historically, NBIX faced fluctuating Asset Turnover Ratios, especially during the early 2000s, ranging between 0.0037 and 0.6856. However, this year's figure augments a continuous value maintenance trend since 2019, reinforcing consistent operational efficiency.


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