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Last update on 2024-06-06

Prologis (PLD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Prologis (PLD) exhibits a Piotroski F-Score of 6/9 for 2023, highlighting strong financial health and efficient operational management.

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: 6

We're running Prologis (PLD) 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?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Piotroski F-Score is a method for evaluating a company's financial soundness based on 9 criteria, leading to a score between 0 to 9. Prologis (PLD) analyzed with this method scores 6. It shows a positive financial condition through specific metrics such as positive net income and cash flow, and increasing current ratio and gross margin. However, there are areas of caution like decreasing Return on Assets (ROA), increased leverage, and share dilution.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, Prologis (PLD) seems to be a relatively solid investment but with some areas needing attention. The company's profitability and liquidity are strong, but potential investors should be wary of the recent increase in leverage and dilution of shares. It's worth further investigation, focusing on understanding the reasons behind these weaker points and how they might impact future performance.

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

Profitability of Prologis (PLD)

Company has a positive net income?

Net income is one of the most critical indicators of a company's financial health. It represents the company's total earnings and is essential in determining overall profitability. Consistently positive net income signals a company's ability to generate profit over time, whereas a negative net income indicates the company may be struggling financially.

Historical Net Income of Prologis (PLD)

The net income for Prologis (PLD) in 2023 is $3,059,214,000, which is positive. This adds 1 point per the Piotroski criterion. Historically, looking at the last 20 years of data, Prologis has shown robust profitability with increasing net income over time, albeit with a few years of negative earnings around the 2008 financial crisis. The recent positive trend in net income is a good indicator of Prologis' stable and improving financial health.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses a company's ability to generate sufficient cash flow from its core business activities.

Historical Operating Cash Flow of Prologis (PLD)

For Prologis (PLD), the Cash Flow from Operations (CFO) in 2023 stands at $5,373,058,000, which is positive. This merits 1 point according to the Piotroski criteria. The trend over the last 20 years shows a steady increase in CFO, reflecting an effective management and optimization of operational activities. Starting from $271,536,000 in 2003 and rising continuously to the current figures underscores Prologis' robust cash-generating capabilities from its foundational business activities. This positive trajectory signals operational efficiency and financial health.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is a crucial measure in assessing how efficiently a company is using its assets to generate earnings.

Historical change in Return on Assets (ROA) of Prologis (PLD)

The ROA of Prologis (PLD) decreased from 0.046 in 2022 to 0.0338 in 2023. This change results in a score of 0 for this criterion. The decline indicates a less efficient use of assets in generating earnings compared to the prior year. Moreover, the trend contrasts with the industry's median ROA, which trends around much higher values, indicating a concerning underperformance versus industry peers.

Operating Cashflow are higher than Netincome?

The criterion of Operating Cash Flow being higher than Net Income is a pivotal measure to evaluate a company's quality of earnings. A company consistently generating higher Operating Cash Flow than Net Income indicates strong cash generation and earnings quality, which is crucial for long-term sustainability.

Historical accruals of Prologis (PLD)

In 2023, Prologis reported Operating Cash Flow of $5.373 billion compared to Net Income of $3.059 billion. This yields a positive differential of approximately $2.315 billion, underscoring a robust capacity for cash generation. Over the last 20 years, Prologis has shown a commendable trajectory in Operating Cash Flow with a consistent upward trend, accentuating its improving operational efficiency. Positive Operating Cash Flow outpacing Net Income is quintessential as it assures the stakeholders regarding the liquidity and financial health. Hence, in this criterion, Prologis scores 1 point, indicating a strong financial posture.

Liquidity of Prologis (PLD)

Leverage is declining?

Change in Leverage assesses whether a company's debt level relative to equity has decreased. A decrease generally indicates reduced financial risk.

Historical leverage of Prologis (PLD)

From 2022 to 2023, Prologis (PLD) experienced an increase in leverage from 0.2614 to 0.3077. The result is clear: leverage has risen. Higher leverage can indicate increased financial risk and potential stress on a company's balance sheet. Historically, Prologis's leverage has been on a decreasing trend since a peak in 2008 at 1.4611, hinting at efforts to stabilize and reduce debt. However, the 2023 uptick needs careful monitoring to understand whether it represents a strategic decision, such as leveraging for new investments, or an unwanted deviation. Given this rise, Prologis does not score on this Piotroski criterion.

Current Ratio is growing?

The current ratio is a crucial liquidity metric, reflecting a company's ability to cover its short-term liabilities with its short-term assets.

Historical Current Ratio of Prologis (PLD)

The current ratio for Prologis increased to 0.5507 in 2023 from 0.456 in 2022, indicating improved short-term liquidity. This increase results in adding 1 point according to the Piotroski criteria. However, it's essential to note that while the current ratio is improving, it remains below the industry's median of 0.763 for 2023, suggesting that Prologis's liquidity position, while improved, is still weaker than its peers on this measure.

Number of shares not diluted?

The change in shares outstanding assesses whether a company has increased or decreased its number of shares.

Historical outstanding shares of Prologis (PLD)

The Outstanding Shares of Prologis (PLD) increased from 785,675,000 in 2022 to 924,351,000 in 2023. This increase implies a dilution of shares, which can be a negative signal for existing shareholders as it reduces their ownership percentage in the company. Over the last 20 years, there has been a consistent trend of increasing shares, rising from approximately 82.85 million in 2003 to 924.35 million in 2023. This increasing trend may reflect numerous rounds of capital raising or stock issuances, which might indicate the company's reliance on equity financing. Therefore, according to the Piotroski F-Score criterion for change in shares outstanding, the score is 0.

Operating of Prologis (PLD)

Cross Margin is growing?

The change in Gross Margin for Prologis (PLD) evaluates improvements in the company's efficiency at managing production cost relative to its revenue. This is pivotal as a higher Gross Margin typically indicates better control over costs and enhanced capacity to generate profit.

Historical gross margin of Prologis (PLD)

As per the data provided for Prologis (PLD), the Gross Margin has increased from 0.7474 in 2022 to 0.7494 in 2023. This increment, though marginal, suggests a slight enhancement in the company's cost management efficiency. This positive trend scores 1 point in the Piotroski Analysis. Additionally, it is insightful to compare this with the last 20 years of gross margins, which shows considerable fluctuations but mostly trending above the industry median since 2008. Despite some decline around 2009-10, Prologis has consistently maintained a competitive edge in its Gross Margin, often outperforming the industry median which peaked distinctively lower around the global economic crisis of 2008-2009. The recent improvements reaffirm Prologis's steady resurgence in maintaining superior efficiency. Consequently, the Gross Margin criterion for Piotroski Analysis scores a point (+1) for Prologis.

Asset Turnover Ratio is growing?

Asset turnover measures how efficiently a company uses its assets to generate sales. It's calculated by dividing net sales by average total assets.

Historical asset turnover ratio of Prologis (PLD)

Prologis (PLD)'s asset turnover ratio increased from 0.0816 in 2022 to 0.0887 in 2023. This improvement is a positive indicator of the company's operational efficiency, suggesting it was able to generate more revenue per dollar of assets compared to the previous year. Historically, Prologis's asset turnover has fluctuated, peaking at 0.1181 in 2003 but dropping as low as 0.0675 in 2013. The 2023 ratio, while not the highest of the past two decades, marks a positive trend and earns the company 1 point in the Piotroski analysis for showing improved efficiency.


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