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Last update on 2024-06-07

Paramount Global (PARA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Piotroski F-Score analysis of Paramount Global (PARA) for 2023 reveals a moderate financial position with a score of 4/9, examining 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: 4

We're running Paramount Global (PARA) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
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?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score assesses a company's financial health based on profitability, liquidity, and operational efficiency, on a scale of 0 to 9. Paramount Global (PARA) scored 4 out of 9 on this scale, indicating mixed financial health. They have positive cash flow in 2023 and asset turnover has slightly improved. However, there are concerns: they reported a net loss, declining return on assets, increased leverage, a decrease in gross margin, and dilution of shares. The rising current ratio improves their short-term financial stability, yet PARA's historical fluctuations signal continued volatility.

Insights for Value Investors Seeking Stable Income

Paramount Global's current Piotroski score suggests a cautious approach if considering investment. While they have positive cash flow and improving asset turnover, significant issues like repeated net losses, declining efficiency, and increased debt pose risks. Investors should carefully evaluate these concerns against potential return prospects and may want to consider other companies with more stable financial metrics. Meeting with a financial advisor for an in-depth analysis might be beneficial before making decisions.

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

Profitability of Paramount Global (PARA)

Company has a positive net income?

Reviewing a company's net income is crucial as it represents the profitability after all expenses have been deducted from total revenue.

Historical Net Income of Paramount Global (PARA)

For the year 2023, Paramount Global (PARA) reported a net income of -$608 million. This figure is negative, signaling a net loss for the company. Over the past 20 years, PARA has experienced significant fluctuations in its net income, with particular major losses in several years, including 2004 (-$17.462 billion) and 2008 (-$11.673 billion). The recent negative net income thus contributes to a mixed track record of profitability for PARAM. Given this criterion, PARA receives no points as the net income in 2023 is negative, which is concerning for potential investors.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates if a company is generating sufficient positive cash flow from core business operations. It is crucial as it reflects the company's financial health.

Historical Operating Cash Flow of Paramount Global (PARA)

In 2023, Paramount Global reported a CFO of $475 million, which is positive. Historically, the company's CFO has seen significant variations. For instance, in 2022 the CFO was negative at $219 million. Thus, the positive CFO in 2023 marks an improvement, although it is relatively lower than its historical peaks, such as in 2003 when the CFO was $3.497 billion. This trend indicates incremental recovery but highlights the necessity for sustained operational efficiency.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) measures how efficiently a company is using its assets to generate profit. An improvement in ROA indicates better efficiency and profitability.

Historical change in Return on Assets (ROA) of Paramount Global (PARA)

In 2022, Paramount Global (PARA) had an ROA of 0.0189, which dropped to -0.0109 in 2023. This negative trend in ROA, moving from a positive to a negative figure, implies that the company became less efficient at generating profit from its assets year-over-year. Specifically, the ROA went from 1.89% to -1.09%, which is concerning as it shows a decline in profitability and efficiency. Historically, comparing this with the industry's median ROA, which hovered between 38.86% and 48.53% over the past 20 years, PARA's current ROA is significantly lower than the industry norm, highlighting a competitive disadvantage.

Operating Cashflow are higher than Netincome?

Operating cash flow (OCF) higher than net income is a positive indicator because it suggests that the company is generating adequate cash flows from its core operations, even though it recorded a net loss. It is crucial as it indicates the operational health and liquidity of the company.

Historical accruals of Paramount Global (PARA)

In 2023, Paramount Global (PARA) recorded an OCF of $475 million compared to a net loss of $608 million. This discrepancy reveals that the company's core operations are still generating positive cash flows despite the reported net loss. This trend is a strong indicator of operational efficiency, suggesting that Paramount Global can meet its short-term liabilities and sustain business activities without external financing. Historical data reflecting fluctuations in OCF and net income emphasizes that despite periods of net losses, OCF remained robust, further underscoring this positive trend. A score of 1 point is awarded.

Liquidity of Paramount Global (PARA)

Leverage is declining?

Change in Leverage measures a company's risk exposure by comparing debt levels over time. A decrease suggests improved financial health, thus increasing score.

Historical leverage of Paramount Global (PARA)

Examining Paramount Global's leverage ratios, we note a minor uptick from 0.2917 in 2022 to 0.2962 in 2023. Although the change is slight, leverage has indeed increased, signaling a rise in debt relative to equity. Over the past two decades, Paramount’s leverage peaked at 0.4541 in 2015 and exhibited a general downtrend before this recent rise. This increase in leverage in 2023 does not earn a Piotroski point, reflecting heightened financial risk. Historically, despite a volatile leverage profile, the latest uptick should be closely examined for any sustainable impact on financial stability.

Current Ratio is growing?

Current ratio measures a company's ability to cover its short-term liabilities with its short-term assets.

Historical Current Ratio of Paramount Global (PARA)

The current ratio for Paramount Global (PARA) stands at 1.3156 in 2023, up from 1.2272 in 2022, marking a slight increase. This suggests an improvement in PARA's liquidity position, meaning it's better equipped to meet its short-term liabilities than in the previous year. Historically, PARA's current ratio has generally stood above the industry median. For instance, in 2023 the industry median was 1.0522 compared to PARA's 1.3156. Therefore, PARA is relatively better positioned than many of its peers, reflecting prudent short-term asset management. Nevertheless, both the historical data and the industry median illustrate that the company's current ratio generally fluctuates around both internal and external benchmarks, emphasizing the significance of maintaining robust liquidity management practices.

Number of shares not diluted?

Analyzing changes in shares outstanding is crucial as it helps investors understand whether a company is engaging in actions like stock buybacks or issuing more shares, which can affect shareholder value.

Historical outstanding shares of Paramount Global (PARA)

For the year 2022, Paramount Global had 649,000,000 outstanding shares, which increased to 652,000,000 shares in 2023, resulting in a net increase of 3,000,000 shares. This rise indicates a 0 point according to the Piotroski score as issuing more shares can dilute existing shareholders' value. Historically, the company has seen fluctuations, notably reducing shares from 880,350,000 in 2003 to a lesser extent by 2018 but has seen an upward trend recently, particularly from 2021 onwards.

Operating of Paramount Global (PARA)

Cross Margin is growing?

The Change in Gross Margin measures the difference in gross profit between two periods. For Paramount Global (PARA), we are comparing 2023's Gross Margin of 0.245 with 2022's Gross Margin of 0.3419. A higher Gross Margin indicates that the company retains more revenue after incurring the cost of goods sold (COGS).

Historical gross margin of Paramount Global (PARA)

In 2023, Paramount Global (PARA) posted a Gross Margin of 0.245, a noticeable decline from 0.3419 in 2022. This trend highlights a decrease in PARA's efficiency in managing its production costs and controlling COGS, ultimately retaining less revenue. Over the past 20 years, PARA's Gross Margins have generally fluctuated within a higher range, especially surpassing the industry median from 2003 to 2021. However, the sharp deviation from 2022 to 2023 indicates potential challenges in cost management or pricing power. Hence, for this criterion in our Piotroski analysis, PARA scores 0 points.

Asset Turnover Ratio is growing?

Asset Turnover evaluates a company's ability to generate sales from its assets. A higher ratio indicates efficient use of assets.

Historical asset turnover ratio of Paramount Global (PARA)

For Paramount Global (PARA), the Asset Turnover ratio increased from 0.5154 in 2022 to 0.5298 in 2023, meriting 1 point according to Piotroski criteria. Observing the historical trend, PARA's asset turnover has varied, hitting a low of 0.2618 in 2005 and peaking at 0.7793 in 2019. The increase in 2023 signals moderately higher efficiency in asset utilization compared to the previous year, which can be seen as a positive development.


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