NEM.DE 93.15 (+0.22%)
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Last update on 2024-06-07

Nemetschek (NEM.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Analyse the financial health of Nemetschek (NEM.DE) based on Piotroski F-Score for 2023. Final score: 7/9.

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 Nemetschek (NEM.DE) 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?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is used to rate the financial strength of a company on a scale from 0 to 9, with 9 being the best. Nemetschek (NEM.DE) scored a 7 out of 9 on the Piotroski scale, which indicates a strong financial performance. Key highlights include: their profitability is solid with a positive net income and cash flow from operations; however, the return on assets has decreased recently. Their operating cash flow is significantly higher than their net income, showing good earnings quality. On the liquidity front, Nemetschek shows an improved current ratio and decreasing leverage. However, the company has seen a slight decrease in asset turnover, indicating some inefficiency in using assets to generate revenue. The number of shares has remained stable with no dilution. Overall, they maintain a healthy gross margin indicative of strong cost control.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7, Nemetschek (NEM.DE) demonstrates strong financial stability, profitability, and efficient cash flow management. Despite minor inefficiencies in asset utilization, the company's ability to generate cash and improve its leverage and liquidity position makes it a potentially attractive investment. It could be worth looking into this stock further for its solid financials and long-term 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 Nemetschek (NEM.DE)

Company has a positive net income?

Net income is a critical measure of a company's profitability and financial health.

Historical Net Income of Nemetschek (NEM.DE)

Nemetschek's net income for 2023 is positive at €161,256,000. This is a good indicator as it adds 1 point to the Piotroski score. Historically, the company has had positive net income for most of the past 20 years, with only two years (2006 and 2007) showing non-positive net incomes. This consistent trend indicates the company's robust profitability and financial stability.

Company has a positive cash flow?

Assessing Cash Flow from Operations is vital as it reflects the cash a company generates from its regular business activities, indicating its sustainability.

Historical Operating Cash Flow of Nemetschek (NEM.DE)

The Cash Flow from Operations (CFO) for Nemetschek (NEM.DE) in 2023 is €252.88 million, which is positive. A positive CFO suggests that Nemetschek is generating enough cash from its core operating activities, ultimately contributing to liquidity and financial stability. The historical data further supports this assessment. Over the past 20 years, Nemetschek's CFO shows a steady upward trend, rising from €13.97 million in 2003 to €252.88 million in 2023. This continuous growth underscores the company's ability to generate consistent cash flow, reflecting an increasingly robust business model. Therefore, under the Piotroski F-Score criteria, Nemetschek earns 1 point for having a positive CFO.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) from one year to the next.

Historical change in Return on Assets (ROA) of Nemetschek (NEM.DE)

Nemetschek's ROA decreased from 0.1426 in 2022 to 0.1304 in 2023. This indicates a decline in asset efficiency, resulting in 0 points for this criterion. Historically, its ROA fluctuated, showing both rises and drops, but the past year’s decline suggests a potential inefficiency in asset utilization. Notably, Nemetschek's ROA consistently trailed behind the industry median, which hovered around values significantly higher than Nemetschek's ROA across the last 20 years. While Nemetschek managed positive operating cash flows, its underperformance in ROA against industry standards warrants closer examination.

Operating Cashflow are higher than Netincome?

The criterion checks if the Operating Cash Flow is higher than the Net Income for Nemetschek (NEM.DE). This indicates strong earnings quality.

Historical accruals of Nemetschek (NEM.DE)

As of 2023, the Operating Cash Flow of Nemetschek is €252,879,000 while the Net Income is €161,256,000. This results in a positive indicator under the Piotroski Analysis framework, as the Operating Cash Flow significantly exceeds the Net Income. This suggests that the company’s earnings quality is robust and that it is generating substantial cash relative to its reported profits, thus adding 1 point to the Piotroski Score. Historical data shows a consistent upward trend in operating cash flow, peaking in 2023. In contrast, net income has displayed some variability but remains significantly lower than operating cash flow, reinforcing the company's ability to generate cash and manage earnings efficiently. Therefore, this trend is good for evaluating the company’s financial health.

Liquidity of Nemetschek (NEM.DE)

Leverage is declining?

Change in Leverage indicates the change in a company's financial leverage or its use of borrowed funds for operations. It's a key measure of financial health.

Historical leverage of Nemetschek (NEM.DE)

Nemetschek's leverage decreased slightly from 0.0579 in 2022 to 0.0415 in 2023. This shift in leverage is advantageous for the Piotroski F-score, as it signifies an improvement in financial stability. Historical analysis reveals that Nemetschek has managed its leverage prudently over the past 20 years, with leverage falling significantly from a high of 0.2184 in 2019 to a low of 0.0415 in 2023. Interestingly, from a larger perspective, this downward trend in leverage, especially the notable drop from 0.1646 in 2014 to 0.0415 in 2023, underscores a consistent effort in deleveraging, thus portraying a picture of strong fiscal responsibility. Given this decrease in leverage for 2023, Nemetschek scores 1 point for this criterion.

Current Ratio is growing?

The Current Ratio is calculated by dividing a company's current assets by its current liabilities. It measures a company's ability to pay short-term obligations.

Historical Current Ratio of Nemetschek (NEM.DE)

Nemetschek's Current Ratio increased from 0.8101 in 2022 to 1.0439 in 2023. This is a positive indication as it suggests an improvement in the company's liquidity position. A Current Ratio greater than 1 typically signifies that the company has enough assets to cover its short-term liabilities. Furthermore, though still below the industry median of 1.7519 in 2023, Nemetschek's upward trend reflects better financial management and a potential reduction in financial risk.

Number of shares not diluted?

The criterion assesses whether the company has diluted its existing shareholders by issuing more shares. A decrease in outstanding shares generally indicates a shareholder-friendly approach.

Historical outstanding shares of Nemetschek (NEM.DE)

The number of outstanding shares for Nemetschek has remained consistent at 115,500,000 from 2022 to 2023. Given that there has been no increase or decrease in the outstanding shares, this suggests that the company has not engaged in any shareholder dilution or share repurchase. According to the Piotroski score, the constant number of shares results in a score of 0 for this criterion. Historical data supports this observation, showing that Nemetschek has maintained a consistent share count over the last 20 years, with minor fluctuations in 2005. Therefore, for this criterion, Nemetschek scores 0 points as there is no trend of decreasing shares, but also no dilution.

Operating of Nemetschek (NEM.DE)

Cross Margin is growing?

The change in Gross Margin is important as it shows the company's ability to control its production costs more effectively than the competition.

Historical gross margin of Nemetschek (NEM.DE)

Nemetschek's Gross Margin has increased slightly from 0.576 in 2022 to 0.5765 in 2023. Even though this increment appears minor, it demonstrates continued efficiency in managing production costs and maintaining profit margins. Therefore, Nemetschek adds 1 point for this criterion. Particularly noteworthy is the stability of Nemetschek's Gross Margin over the years. It's remarkable how the company's margin has stayed steady since 2019, and it outperforms the industry's median Gross Margin in most years from 2007 to 2023, indicating its strong economic moat.

Asset Turnover Ratio is growing?

The Asset Turnover ratio measures a company's efficiency at using its assets to generate revenue. An increasing ratio indicates better performance.

Historical asset turnover ratio of Nemetschek (NEM.DE)

Comparing the Asset Turnover ratios for Nemetschek (NEM.DE), the figure has decreased from 0.7063 in 2022 to 0.6888 in 2023. This is not favorable as it indicates reduced efficiency in utilizing assets. Historically, the Asset Turnover ratios have shown fluctuations with a peak of 1.1292 in 2003 and a steady decline in recent years, reflecting ongoing inefficiency issues. Hence, Nemetschek gets 0 points in this criterion.


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