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Last update on 2024-06-07

Nova (NVMI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

In-depth Piotroski F-Score analysis of Nova (NVMI) for 2023. Discover financial standing and investment potential with a final score of 4/9.

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: 4

We're running Nova (NVMI) 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?
0
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is used to assess the financial strength of Nova (NVMI) based on profitability, liquidity, and operating efficiency. Nova's Piotroski score is 4 out of 9, indicating a moderate financial position. The company demonstrated positive net income and cash flow, increased leverage, and improved gross margins but showed declines in ROA, current ratio, and asset turnover. There was also an increase in outstanding shares, suggesting potential dilution for existing shareholders.

Insights for Value Investors Seeking Stable Income

Nova (NVMI) has shown some strengths, such as positive net income and cash flow, and reduction in leverage. However, declines in ROA, current ratio, and asset turnover, coupled with increasing outstanding shares, suggest caution. For investors, it might be worth considering Nova, but only with due diligence concerning the noted weaknesses.

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

Profitability of Nova (NVMI)

Company has a positive net income?

Positive net income indicates profitability, reflecting good financial health of a company and providing confidence to investors.

Historical Net Income of Nova (NVMI)

Nova (NVMI) reported a net income of $136.31 million in 2023. This figure is positive; thus, it earns 1 point in the Piotroski score. Over the past 20 years, Nova's net income trend shows steady improvement. Starting from a low of -$4.2 million in 2003 to the latest $136.31 million, the company has exhibited a long-term growth trajectory. This positive trend signals strong financial health and profitability, providing investors with a solid basis for confidence in Nova's continued performance.

Company has a positive cash flow?

Check if CFO 123531000 in 2023 are positive or negative. If the CFO is positive, add 1 point, otherwise set it to 0.

Historical Operating Cash Flow of Nova (NVMI)

The Cash Flow from Operations (CFO) for Nova (NVMI) in 2023 is positive at $123,531,000, thus earning a point. Evaluating Nova's historical cash flow reveals a robust upward trend: from $4,574,000 in 2007 to this year's $123,531,000. Particularly since 2018, cash flows have consistently improved, underscoring effective operations and management. Such growth in cash flow is a strong indicator of the firm's financial health and operational efficiency.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability relative to its total assets. It's a critical metric for determining a company's efficiency in generating profits from its assets.

Historical change in Return on Assets (ROA) of Nova (NVMI)

The Return on Assets (ROA) for Nova (NVMI) decreased from 0.1567 in 2022 to 0.1287 in 2023. Consequently, it results in a Piotroski score of 0 for this criterion. This decreasing trend is somewhat concerning as it suggests that the company has become less efficient in converting its assets into earnings. Additionally, when considering the last two decades, Nova's operating cash flow has been inconsistent, with some years showing negative figures. Finally, when compared to the industry median ROA of 0.4718 in 2023, Nova's ROA is significantly lower, further indicating that the company is underperforming relative to its industry peers.

Operating Cashflow are higher than Netincome?

Positive operating cash flow is higher than net income.

Historical accruals of Nova (NVMI)

In the fiscal year of 2023, Nova (NVMI) registered an Operating Cash Flow of $123.53 million and a Net Income of $136.31 million. Since the operating cash flow falls short of the net income, we assign a score of 0. Typically, investors look for cases where operating cash flow surpasses net income as a sign that earnings are backed by actual cash inflows. A lower operating cash flow compared to net income might suggest potential income quality issues if consistently observed over multiple periods. Historical data reveals variability in Nova's operating cash flow and net income alignment. For instance, in 2021 and 2022, the trend was more favorable with operating cash flows closer to, yet below, net income values.

Liquidity of Nova (NVMI)

Leverage is declining?

The criterion evaluates whether the company's financial leverage, which is the ratio of its debt to its equity, has decreased from the prior year. Lowering leverage is a positive indicator of financial health and risk management.

Historical leverage of Nova (NVMI)

In 2022, Nova's (NVMI) leverage was 0.244, but it improved to 0.0351 in 2023. A decline in leverage signifies a decrease in the company's reliance on debt to finance its operations, suggesting a stronger balance sheet and improved financial health. Historically, Nova's leverage has fluctuated, with a notable drop in 2019 and 2023. This decrease in 2023 is a positive trend, earning Nova an additional point according to the Piotroski Score criteria. The company’s significant reduction in leverage points to a prudent approach to managing its debt obligations.

Current Ratio is growing?

Evaluate the change in the current ratio to assess Nova's (NVMI) short-term financial health and liquidity. This criterion examines a company's ability to cover short-term liabilities with short-term assets.

Historical Current Ratio of Nova (NVMI)

The current ratio for Nova (NVMI) has decreased from 4.5719 in 2022 to 2.2001 in 2023. This substantial drop indicates a decline in the company's ability to cover its short-term liabilities with its short-term assets. Historically, over the last 20 years, Nova's current ratio has fluctuated but has mostly remained above the industry median current ratio. In comparison, the industry median current ratio for 2023 is 3.161, which Nova's current ratio falls below. This suggests weakening liquidity and may contribute to potential financial stress in meeting short-term obligations. Therefore, the current ratio score should be set to 0.

Number of shares not diluted?

One of the criteria in the Piotroski Score is the change in the number of shares outstanding, which is important because it reflects the equity financing activities of the company. A decrease in shares suggests a company is buying back shares, signaling management's confidence in the company's future.

Historical outstanding shares of Nova (NVMI)

For Nova (NVMI), the Outstanding Shares have increased from 28,697,000 in 2022 to 28,828,000 in 2023. This results in a score of 0 for this criterion, as the shares outstanding have not decreased. Historically, Nova's outstanding shares showed a steady increase from 14,994,000 in 2003 to 28,828,000 in 2023, with only minor fluctuations in certain years such as 2015 and 2016 where the numbers slightly dipped. This upward trend suggests a consistent strategy of equity issuance over the years, which could imply continuous investment in growth or acquisitions. However, an increase in outstanding shares also means potential dilution for existing shareholders. Additionally, the continuous issuance of shares could be interpreted as a sign that the company relies more on equity financing rather than generating sufficient internal funds.

Operating of Nova (NVMI)

Cross Margin is growing?

Change in Gross Margin for Nova (NVMI) and its importance.

Historical gross margin of Nova (NVMI)

Comparing the Gross Margin of 0.5661 in 2023 with 0.5554 in 2022, we observe an increase. Thus, Nova gains a point for this criterion, scoring 1. Historical data shows that Nova excels with a Gross Margin consistently outperforming the industry's median. Over the past 20 years, Nova's Gross Margin has generally been above 50%, showcasing robust profitability. The 2023 Gross Margin stands significantly superior to the industry's 0.4718, reinforcing Nova's strong competitive position and prudent cost management, a promising sign for investors.

Asset Turnover Ratio is growing?

Asset Turnover refers to the efficiency of a company's use of its assets to generate sales revenue. It is determined by dividing total sales by total assets.

Historical asset turnover ratio of Nova (NVMI)

From the provided data, the Asset Turnover for Nova (NVMI) decreased from 0.638 in 2022 to 0.4891 in 2023. This indicates a decline in the efficiency with which the company is using its assets to generate revenue. Based on this trend, we will allocate 0 points to this criterion. Over the past 20 years, the highest asset turnover was 1.2899 in 2010, while the most recent value (0.4891) is the lowest in this period. This drop reflects a downward trend, signaling potential challenges in asset management or operational efficiency for Nova. It's essential to monitor such trends as they have significant implications for the company's profitability and overall financial health.


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