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Prosus (PRX.AS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

In-depth analysis of Prosus (PRX.AS) using Piotroski F-Score in 2023. Discover profitability, liquidity, and operational efficiency insights. Final Score: 5/9.

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: 5

We're running Prosus (PRX.AS) 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?
0
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score assesses a company's financial health through 9 criteria related to profitability, liquidity, and operating efficiency. Prosus (PRX.AS) scored 5 out of 9, indicating moderate financial health and some positive aspects along with several concerns. Of note, Prosus has a positive net income and an increasing current ratio, reflecting profitability and better short-term financial health. However, negative cash flow from operations and increasing leverage are red flags.

Insights for Value Investors Seeking Stable Income

Considering Prosus scored 5 out of 9 on the Piotroski scale, it has a mix of strengths and weaknesses. While profitability and liquidity have strong points, operational cash flow issues and growing leverage could pose risks. It may be worth researching further, but investors should be cautious and possibly look at other stocks with higher scores who demonstrate more stability and efficiency.

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

Profitability of Prosus (PRX.AS)

Company has a positive net income?

Net income is a company's total earnings and a significant indicator of its profitability. A positive net income points to a profitable company.

Historical Net Income of Prosus (PRX.AS)

For 2023, Prosus (PRX.AS) reported a net income of €10,112,000,000. This positive net income indicates that the company is generating profits. Over the last two decades, Prosus shows a fluctuating trend in net earnings—from substantial losses like -€121,087,000 in 2012 to significant profits, such as €11,485,000,000 in 2018 and €18,733,000,000 in 2022. This positive trend in recent years underscores Prosus' capability to generate and sustain profitability, although the fluctuations suggest some volatility in their performance. For this criteria in the Piotroski analysis, the net income is positive, thereby adding 1 point.

Company has a positive cash flow?

Cash flow from operations (CFO) reveals the amount of cash generated by a company’s normal business operations, and it is crucial for assessing financial health.

Historical Operating Cash Flow of Prosus (PRX.AS)

For 2023, Prosus has a negative CFO of -120,000,000. This indicates the company's core business operations did not generate positive cash flow in that year, scoring 0 points based on Piotroski criteria. Analyzing the past 20 years of CFO data reveals a fluctuating trend, with periods of improvement often followed by significant declines. Notably, Prosus had positive CFO in 2021 at 159,000,000 but faced substantial negative CFO in other recent years, like -605,000,000 in 2022. This inconsistency highlights concerning volatility in operational efficiency.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) evaluates how effectively a company is converting its investments into net income. It offers insight into management efficiency.

Historical change in Return on Assets (ROA) of Prosus (PRX.AS)

The ROA for Prosus in 2023 was 0.1483, down from 0.2949 in 2022. This decline suggests reduced efficiency in asset utilization, a concerning sign for stakeholders, deviating from prior trends.

Operating Cashflow are higher than Netincome?

Analyzing the relationship between operating cash flow and net income offers insights into the quality of a company's earnings and its operational efficiency. It is crucial because it helps investors understand the proportion of net income that is generated from actual business operations, indicating sustainable earning power.

Historical accruals of Prosus (PRX.AS)

For Prosus (PRX.AS), in 2023, the company reported an operating cash flow of -120 million euros, which is significantly lower than its net income of 10,112 million euros. Consequently, this criterion yields 0 points. Historically, the company has faced similar challenges. For example, in 2022, the operating cash flow was -605 million euros compared to a net income of 18,733 million euros, and in 2020, the operating cash flow was -209 million euros versus a net income of 3,771 million euros. This discrepancy can indicate lower-quality earnings or aggressive accounting practices, particularly considering cash flows from operations have been negative or marginally positive over different years.

Liquidity of Prosus (PRX.AS)

Leverage is declining?

Analyze the change in company's leverage by comparing the leverage ratio in 2022 to the leverage ratio in 2023.

Historical leverage of Prosus (PRX.AS)

The leverage for Prosus (PRX.AS) has increased from 0.2224 in 2022 to 0.2423 in 2023. This marks an increase in leverage for the year 2023, indicating that the company has become slightly more reliant on debt to finance its operations. The leverage ratio increased by approximately 8.95%. On the Piotroski scale, increasing leverage is unfavorable, hence it doesn't score a point for this criterion.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its current assets. An increase generally indicates improved liquidity.

Historical Current Ratio of Prosus (PRX.AS)

For Prosus (PRX.AS), the Current Ratio has increased from 3.4591 in 2022 to 5.3056 in 2023. This rise signifies an improvement in the company’s liquidity and short-term financial health. Reviewing historical data, the Current Ratio varied, from a peak at 24.7434 in 2012 to a low of 1.7722 in 2017. In comparison with its industry median, consistently above these values in the latest years, the Current Ratio is substantially higher, indicating a stronger position to meet short-term liabilities than industry peers. This increasing trend in 2023 is favorable, highlighting better financial health and stability. Therefore, for this criterion, we allot 1 point to Prosus.

Number of shares not diluted?

This metric assesses whether a company is issuing new shares to raise capital or repurchasing shares. Share buybacks are usually seen as a positive sign.

Historical outstanding shares of Prosus (PRX.AS)

In 2022, Prosus had 3,284,032,419 outstanding shares, while in 2023, the number of outstanding shares decreased to 2,958,518,019. This represents a reduction in outstanding shares. Looking at the historical data, the number of shares has been decreasing consistently from 5,942,243,080 in 2017 to 2,958,518,019 in 2023. This is a positive signal, indicating that the company is actively repurchasing its shares, which can increase the value of existing shares and is typically seen as a sign of confidence by the management. Therefore, 1 point is added for this criterion.

Operating of Prosus (PRX.AS)

Cross Margin is growing?

Gross Margin measures the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency of a company.

Historical gross margin of Prosus (PRX.AS)

The gross margin for Prosus (PRX.AS) has increased from 0.2626 in 2022 to 0.2874 in 2023, earning 1 point in the Piotroski Score. This improvement suggests better cost efficiency and profitability. Despite this positive trend, Prosus's gross margin remains significantly below the industry median of 0.7025 for 2023, highlighting potential areas for further improvement to match or exceed industry standards. Historically, Prosus had higher margins, peaking in earlier years, but a downward trend began post-2020.

Asset Turnover Ratio is growing?

Asset Turnover is calculated by dividing the company's total revenue by its average total assets. It provides insight into how efficiently a company uses its assets to generate revenue. A higher asset turnover indicates a more efficient use of assets.

Historical asset turnover ratio of Prosus (PRX.AS)

For Prosus (PRX.AS), the Asset Turnover in 2023 is 0.0845 compared to 0.0822 in 2022, showing an improvement. Therefore, 1 point is added. This indicates a slight increase in efficiency in utilizing its assets to generate revenue year-over-year. However, historical values suggest significant variability, as evidenced by the high of 0.1711 in 2017 and lows such as 0.0037 in 2012, reflecting differing operational contexts and potential restructuring outcomes.


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