PKOH 27.84 (+6.1%)
US7006661000Industrial DistributionIndustrial Distribution

Last update on 2024-06-07

Park-Ohio Holdings (PKOH) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Comprehensive Piotroski F-Score analysis of Park-Ohio Holdings (PKOH) in 2023 with a final score of 7/9, evaluating 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: 7

We're running Park-Ohio Holdings (PKOH) 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?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Park-Ohio Holdings (PKOH) received a Piotroski F-Score of 7 out of 9, indicating a strong financial position. The company has shown positive trends in net income, operating cash flow, and return on assets, reflecting growing profitability and cash-based operations. The liquidity aspect is strong with a rising current ratio, though an increase in leverage raises some concern. There was no dilution of shares in the past year, maintaining shareholder value. Improvements were also seen in gross margin and asset turnover, showcasing better operational efficiency and competitive positioning.

Insights for Value Investors Seeking Stable Income

Given the Piotroski F-Score of 7, Park-Ohio Holdings appears to be a solid investment opportunity. The company has shown fundamental strengths in profitability, liquidity, and operational efficiency. However, it is essential to keep an eye on the increasing leverage which may pose some financial risk. Overall, it is worth considering for investors looking for well-performing, potentially undervalued stocks.

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

Profitability of Park-Ohio Holdings (PKOH)

Company has a positive net income?

Checking net income for Park-Ohio Holdings (PKOH) involves reviewing whether the business is generating profit, which is crucial for long-term sustainability.

Historical Net Income of Park-Ohio Holdings (PKOH)

For 2023, Park-Ohio Holdings (PKOH) reported a net income of $7,800,000. Given that this figure is positive, it certainly adds a positive point to the Piotroski score for PKOH. A further examination of the company's net income over the past 20 years reveals both highs and lows. For instance, the company saw significant negative net income figures in 2008 (-$119,803,000) and 2020 (-$4,500,000). However, the net income has positive spikes such as in 2015 ($48,100,000) and 2018 ($53,600,000). The most recent upwards trend is an encouraging sign, but it's important to monitor future earnings to determine if this is sustainable.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash generated from a company's regular business operations and is critical for assessing its financial health.

Historical Operating Cash Flow of Park-Ohio Holdings (PKOH)

For the fiscal year 2023, Park-Ohio Holdings (PKOH) reported a positive CFO of $53.4 million. This is an essential positive indicator as it proves the company is generating sufficient cash from its core operations. Over the last 20 years, PKOH has shown variability in its CFO, peaking at $72.9 million in 2016 and hitting a low of -$26.6 million in 2020. The recent CFO turnaround, from -$26.6 million in 2020 to $53.4 million in 2023, underscores a significant improvement in operational efficiency and cash generation, warranting a 1-point addition in the Piotroski Analyses.

Return on Assets (ROA) are growing?

Change in ROA compares the company's Return on Assets from one period to another to gauge profitability improvements. A higher ROA indicates more efficient asset utilization and increased profitability, prompting a positive outlook for investors.

Historical change in Return on Assets (ROA) of Park-Ohio Holdings (PKOH)

For Park-Ohio Holdings (PKOH), the ROA increased significantly from -0.0102 in 2022 to 0.0056 in 2023, marking a recovery in asset profitability. This positive change, translating to a point in the Piotroski score, is a promising sign reflecting improved operational efficiency, despite being below the industry's median ROA of 0.3023 in 2023.

Operating Cashflow are higher than Netincome?

Analyze the criterion 'Operating Cash Flow higher than Net Income' for Park-Ohio Holdings (PKOH) and its significance.

Historical accruals of Park-Ohio Holdings (PKOH)

For 2023, Park-Ohio Holdings (PKOH) reported an Operating Cash Flow of $53.4M compared to a Net Income of $7.8M. Since Operating Cash Flow is higher than Net Income, this adds one point to the Piotroski score for PKOH. This indicates robust cash-based profitability. Over the last 20 years, Operating Cash Flow and Net Income have shown fluctuations, but consistently, years where Operating Cash Flow trumps Net Income depict sound operational efficiency. This trend is generally considered good as it signifies that net income is backed by real cash flow, ensuring the earnings quality.

Liquidity of Park-Ohio Holdings (PKOH)

Leverage is declining?

Evaluate whether Park-Ohio Holdings (PKOH) has reduced its financial leverage over the past year. Decreased leverage indicates lower risk.

Historical leverage of Park-Ohio Holdings (PKOH)

The leverage of Park-Ohio Holdings increased from 0.4864 in 2022 to 0.4981 in 2023. Over the last 20 years, leverage has fluctuated, initially peaking in 2009 at 0.6433, then reducing to a low of 0.4418 in 2020, showing some stability in reduced leverage. However, the recent increase suggests rising concerns about financial stability, placing greater burden on shareholders and pushing PKOH towards higher risk.

Current Ratio is growing?

Explain the criterion for Park-Ohio Holdings (PKOH) and why it is important to consider

Historical Current Ratio of Park-Ohio Holdings (PKOH)

The Current Ratio measures a company's ability to pay its short-term liabilities with its short-term assets. A ratio above 1 indicates that the firm has more current assets than current liabilities, while a decreasing ratio may suggest liquidity problems. In 2023, Park-Ohio Holdings' Current Ratio increased to 2.2673 from 2.0785 in 2022, which is favorable trend and adds 1 point in the Piotroski score.

Number of shares not diluted?

Change in shares outstanding is a key indicator to assess how much value dilution is occurring. A decrease signifies fewer shares available, hence more value per share if all else remains constant.

Historical outstanding shares of Park-Ohio Holdings (PKOH)

The outstanding shares for Park-Ohio Holdings (PKOH) increased from 12,091,712 in 2022 to 12,295,999 in 2023. This represents an increase of 204,287 shares, resulting in zero points for this criterion according to the Piotroski F-Score methodology. Over the last 20 years, the trend in shares outstanding has shown fluctuation but the increase from 2022 to 2023 is a negative indication under this specific criterion as it potentially suggests dilution of shareholder value.

Operating of Park-Ohio Holdings (PKOH)

Cross Margin is growing?

In the Piotroski Score, an increase in gross margin indicates improved competitive position or better management practices. This criterion is essential.

Historical gross margin of Park-Ohio Holdings (PKOH)

For Park-Ohio Holdings (PKOH), the gross margin has increased from 0.141 in 2022 to 0.1635 in 2023. This rise suggests improvements in either cost management or product pricing strategy. Given the data, a positive trend can be seen, especially as this is above the lower historical margins but still significantly below the industry median gross margins, which have been around 0.3023 in 2023. This relative performance-indicator is crucial for understanding Park-Ohio's efficiency in comparison to its peers. A 1-point would be awarded.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales, an increase typically indicates greater efficiency.

Historical asset turnover ratio of Park-Ohio Holdings (PKOH)

The Asset Turnover for Park-Ohio Holdings has increased from 1.0677 in 2022 to 1.1952 in 2023. This is a positive trend and suggests that the company has become more efficient in converting its assets into sales. Comparing these figures, it's clear that the Asset Turnover has indeed risen, thus we can assign 1 point for this criterion. Reviewing the historical data, this uptrend in 2023 aligns with the typical Asset Turnover trends observed prior to the dip in 2020. Between 2003 and 2019, the Asset Turnover had fluctuated but generally remained above 1.1, reaching peaks of 1.6573 in 2011. The year 2023 appears to confirm a positive correction after the disturbances observed around the pandemic period.


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