NWS 28.37 (-0.94%)
US65249B2088Media - DiversifiedEntertainment

Last update on 2024-06-06

News (NWS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

News Corp (NWS) Piotroski F-Score for 2023 is 5/9, assessing profitability, liquidity, and efficiency. A key tool for stock evaluation and investment decisions.

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 News (NWS) 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?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a measure from 0 to 9 evaluating a company's financial health based on profitability, liquidity, and leverage. It helps investors find strong, undervalued stocks. News Corp (NWS) scored 5 out of 9 in 2023. The company's financial assessment showed: 1. Profitability: Positive net income ($149 million) and positive cash flow from operations ($1.092 billion), but a falling Return on Assets (ROA). 2. Liquidity: Increased current ratio (better than short-term liabilities coverage); however, leverage increased, indicating rising debt levels. 3. Operating Efficiency: Operating cash flow exceeded net income, a positive sign. However, gross margin dropped drastically to 0 and asset turnover decreased.

Insights for Value Investors Seeking Stable Income

With a Piotroski score of 5, News Corp (NWS) presents a mixed picture. The company shows some positive financial health indicators, like positive profitability and improved liquidity, yet struggles with high leverage, declining ROA, and alarming drops in gross margin and asset turnover. Investors might want to exercise caution and look into the reasons behind the declines in certain areas before considering an investment. It may be worth keeping an eye on News Corp (NWS) for future improvements or seeking stronger alternatives.

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

Profitability of News (NWS)

Company has a positive net income?

Net income is the total profit of a company after all expenses and taxes have been deducted. It's a crucial indicator of company profitability.

Historical Net Income of News (NWS)

For the fiscal year 2023, News Corp (NWS) reported a net income of $149 million, which is positive amidst a volatile historical performance. Over the past 14 years, NWS has experienced fluctuations in net income, with several years of significant net losses such as 2012 (-$2.075 billion) and 2018 (-$1.514 billion). The positive net income in 2023 mirrors a pattern of recovery observed in 2022 ($623 million) after substantial losses in 2020 and 2021. As per the Piotroski scorecard, a positive net income means NWS secures 1 point. This is an encouraging sign for investors indicating an upswing in profitability.

Company has a positive cash flow?

Evaluate Cash Flow from Operations (CFO) for News (NWS). Positive CFO implies the company generates more cash than it consumes, indicating good fiscal health.

Historical Operating Cash Flow of News (NWS)

News Corporation (NWS) reported a positive Cash Flow from Operations (CFO) of $1,092,000,000 for the year 2023. This is favorable, earning it 1 point in the Piotroski analysis. Examining historical data over the past 20 years indicates yearly CFO variability but an overall resilient performance. Despite dips in 2013, 2017, and some other years, NWS has predominantly maintained positive CFO with notable peaks, reflecting strong operational efficiency and the ability to generate substantial cash. While 2023’s CFO declined from 2022’s $1,354,000,000, it remains considerably high.

Return on Assets (ROA) are growing?

Change in ROA is a measure of a company's profitability relative to its total assets. It's important because it provides insight into how efficiently the company is generating profit from its assets.

Historical change in Return on Assets (ROA) of News (NWS)

In 2023, the ROA for News (NWS) is 0.0087, which is a significant decline from the ROA of 0.0367 in 2022. This decrease indicates a less efficient use of the company's assets in generating profit, resulting in a negative trend for this criterion. Therefore, no point is added for this criterion. Comparing these figures, it shows that the company's ROA has been struggling in the recent year. Additionally, the industry's median ROA was substantially higher at 0.4033 in 2023, further suggesting that News is underperforming relative to its industry peers.

Operating Cashflow are higher than Netincome?

Operating Cash Flow being higher than Net Income

Historical accruals of News (NWS)

In 2023, News (NWS) reported an Operating Cash Flow of $1,092 million as compared to a Net Income of $149 million. This results in a point for this Piotroski criterion. The trend indicates a robust cash generation capability, surpassing net earnings. Operating cash flow is core to business operations and shows real-time profitability and liquidity. Historically, NWS has displayed fluctuations, especially in net income, with years even reporting negative figures. Such consistency in operational cash flows highlights stable operational efficiency despite cyclical profitability.

Liquidity of News (NWS)

Leverage is declining?

Change in leverage reflects a company's debt levels relative to its equity. This is important because higher leverage indicates increased risk.

Historical leverage of News (NWS)

In 2023, the leverage for News (NWS) increased to 0.2404 from 0.2162 in 2022. This trend is identified as unfavorable because a higher leverage indicates that the company has taken on more debt compared to its equity. Over the last 20 years, leverage levels for NWS have fluctuated, with a discernible increase starting from 2016, spiking significantly from 0.0238 in 2016 to 0.2404 in 2023. The steady increase suggests growing reliance on debt, reflecting potential financial risk and diminished financial flexibility for the company.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets. It is important for assessing liquidity.

Historical Current Ratio of News (NWS)

The Current Ratio of News Corp (NWS) has improved from 1.1631 in 2022 to 1.2806 in 2023, signaling enhanced liquidity. This is favorable as it signifies a better ability to cover short-term obligations. Historically, over the past 20 years, News Corp has maintained a Current Ratio mostly above the industry median, suggesting a consistently robust liquidity position. For instance, in 2020, the Current Ratio was 1.2905 against the industry median of 1.2506, while it was 2.1386 in 2013 compared to the industry median of 1.0094. The recent increase is a positive indicator, adding 1 point in the Piotroski Analysis.

Number of shares not diluted?

Change in Shares Outstanding refers to the comparison between the number of shares a company had in the previous period versus this period.

Historical outstanding shares of News (NWS)

The Outstanding Shares decreased from 590,000,000 in 2022 to 576,400,000 in 2023. This decrease indicates that the company may have repurchased shares, which is a positive signal as it can suggest confidence by management in the company's value. It tends to increase the value of remaining shares and earnings per share (EPS). Given this scenario, this would add 1 point under Piotroski's criteria.

Operating of News (NWS)

Cross Margin is growing?

Gross Margin represents the company's gross profit as a percentage of revenue.

Historical gross margin of News (NWS)

The Gross Margin for News (NWS) has significantly decreased from 0.5112 in 2022 to 0 in 2023. This indicates a complete erosion of Gross Margin in the most recent year. Over the last decade, the company's Gross Margin showcased an overall increasing trend, peaking at 0.5112 in 2022, before collapsing to 0 in 2023. This sharp decline in 2023 is alarming and signifies a severe issue in profit generation relative to revenue. Despite previous years of high Gross Margins consistently outperforming industry medians (e.g., 0.5112 against an industry median of 0.4343 in 2022), the current Gross Margin of 0 drastically underperforms the industry median of 0.4033 in 2023. Given this negative development, this criterion scores 0 points.

Asset Turnover Ratio is growing?

The Asset Turnover ratio evaluates a company's efficiency in using its assets to generate sales. An increasing Asset Turnover ratio often indicates better asset utilization.

Historical asset turnover ratio of News (NWS)

Comparing the Asset Turnover of 0.5787 in 2023 with the Asset Turnover of 0.611 in 2022, it is evident that the ratio has decreased. Therefore, according to the Piotroski criteria, we would set this parameter to 0. Analyzing the 20-year historical data of Asset Turnover, News Corporation (NWS) has experienced fluctuations in its asset utilization efficiency. For instance, the low of 0.5337 in 2014 and a relative high of 1.0695 in 2011 highlight this variability. The ratio's decline from 2022 to 2023 raises concerns about potential inefficiencies or challenges faced by the company in leveraging its asset base to drive revenues.


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