PSA 301.73 (-0.88%)
US74460D1090REITsREIT - Industrial

Last update on 2024-06-05

Public Storage (PSA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Public Storage (PSA) scores 4/9 on Piotroski F-Score in 2023. Assessing profitability, liquidity, and leverage criteria for investment insights.

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.
Learn more...

Short Analysis - Piotroski Score: 4

We're running Public Storage (PSA) 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?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score for Public Storage (PSA) is 4 out of 9. This score reflects mixed signals regarding the company's financial health. On the positive side, PSA has shown a positive net income and cash flow from operations, indicating strong profitability. The company also has higher operating cash flow than net income and shows a growing asset turnover ratio, which are good indicators of financial efficiency. However, there are some concerns: PSA's return on assets has declined, its leverage and current ratio have worsened, the number of shares outstanding has increased, and the gross margin has slightly decreased.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 4, PSA shows potential but also has areas of concern. While the company's profitability and cash flow generation are strong, decreasing return on assets, rising leverage, worsened liquidity (current ratio), increase in share outstanding, and decreased gross margin are negative factors that potential investors should consider. It may be worthwhile to investigate these areas further before deciding to invest in PSA, particularly the reasons behind the increase in leverage and decrease in liquidity and return on assets. This mixed performance suggests that PSA may not be a straightforward buy and warrants more in-depth analysis.

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

Profitability of Public Storage (PSA)

Company has a positive net income?

Net income is a crucial measure of a company's profitability. A positive net income means the company is generating profit, which is essential for growth.

Historical Net Income of Public Storage (PSA)

Public Storage (PSA) has reported a net income of $2,148,327,000 for the year 2023. This is positive and adds 1 point in the Piotroski F-Score analysis. In comparison to its history, PSA's net income has shown a general upward trend with significant growth in recent years, peaking in 2021 at $4,349,147,000. The positive net income in 2023 is a clear indicator of continued profitability for PSA, maintaining strong financial health.

Company has a positive cash flow?

The criterion examines if the Cash Flow from Operations (CFO) is positive. A positive CFO indicates healthy operational profitability.

Historical Operating Cash Flow of Public Storage (PSA)

Public Storage (PSA) demonstrates a strong Cash Flow from Operations (CFO) of $3.25 billion in 2023, which is a positive sign and adds 1 point in the Piotroski analysis. This is a continuation of a positive trend over the past 20 years, showing a significant increase from $594.43 million in 2003 to its current level. Over this period, the CFO has consistently grown, illustrating robust and improving operational profitability, a positive indicator for stakeholders.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA): Compare the company's ROA in the current year with the previous year. We award 1 point if the ROA has increased from the previous year.

Historical change in Return on Assets (ROA) of Public Storage (PSA)

For Public Storage (PSA), the Return on Assets (ROA) in 2023 was 0.115, compared to 0.249 in 2022. Evidently, the ROA has decreased over this period, thus we set this criterion to 0. Despite this drop in ROA in 2023, complimentary information such as the company's operating cash flows and the industry's median ROA can provide additional insights. Over the last 20 years, PSA’s operating cashflows have predominantly shown an upward trend, from approximately $594 million in 2003 to about $3.25 billion in 2023, which signifies operational efficiency in generating cash. Comparing to the industry's median ROA, which has fluctuated but remained significantly higher historically, one could argue that PSA’s recent performance might be an outlier and needs deeper investigation. Still, the declining ROA in 2023 is a negative mark in this specific Piotroski criterion.

Operating Cashflow are higher than Netincome?

This criterion measures whether the operating cash flow is higher than the net income, which is important as it indicates high-quality earnings.

Historical accruals of Public Storage (PSA)

In 2023, Public Storage's (PSA) operating cash flow stood at $3,246,648,000, significantly higher than its net income of $2,148,327,000. This indeed adds 1 point to its Piotroski score. High operating cash flow relative to net income indicates strong cash generation capabilities and less aggressive income recognition techniques. Historically, the trend has been stable with operating cash flow consistently growing over the last 20 years, indicating robust operational efficiency. This positive trend reinforces the strength of PSA's earnings quality and highlights the firm's ability to convert earnings into cash, enhancing financial resilience.

Liquidity of Public Storage (PSA)

Leverage is declining?

Change in leverage reflects a company's capital structure and risk exposure.

Historical leverage of Public Storage (PSA)

Public Storage (PSA) has experienced a rise in leverage from 0.3914 in 2022 to 0.4595 in 2023, indicating an increase in leverage. This trend is considered unfavorable for the Piotroski analysis, resulting in a score of 0 for this criterion. Over the past 20 years, there has been notable volatility in PSA's leverage. This consistent rise since 2015 demonstrates a shift towards higher debt, potentially increasing financial risk and affecting credit ratings negatively.

Current Ratio is growing?

Next, the current ratio is evaluated, which measures the company's ability to cover its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity and financial health.

Historical Current Ratio of Public Storage (PSA)

In 2023, Public Storage (PSA) has a current ratio of 0.6177, a significant decrease from 1.5063 in 2022. This downward trend is unfavorable, highlighting a deterioration in liquidity. While PSA's current ratio in 2022 already reflects a rather modest margin for current liabilities, the sharp drop in 2023 exacerbates concerns regarding the company's ability to meet short-term obligations. Notably, the industry median current ratio for 2023 stands at 0.763., rendering PSA's ratio not only below its previous year but also subpar compared to industry standards.

Number of shares not diluted?

This criterion examines whether the company has decreased its number of shares outstanding. A decrease indicates potential share buybacks, reflecting management's confidence in the company's future.

Historical outstanding shares of Public Storage (PSA)

The Outstanding Shares for Public Storage (PSA) increased from 175,257,000 in 2022 to 175,472,000 in 2023. This represents an uptick of 215,000 shares over the year. This trend does not align with Piotroski's criterion, which requires a reduction in outstanding shares for a positive signal. Consequently, Public Storage does not earn a point for this metric. It’s important to note, however, that over the last two decades, the company has seen a general increase in its share count, with a significant rise observed between 2007 and 2008. This growth pattern suggests a potential strategy of raising capital through issuing shares rather than buybacks, which could be construed either as a necessity for expansion or as a dilution of shareholder value, depending on other financial metrics.

Operating of Public Storage (PSA)

Cross Margin is growing?

Change in Gross Margin evaluates the difference in gross profit as a percentage of revenue between two periods. A higher margin suggests improved efficiency and profitability.

Historical gross margin of Public Storage (PSA)

For Public Storage (PSA), the gross margin slightly decreased from 0.7482 in 2022 to 0.7459 in 2023. This marginal decline of 0.23 percentage points suggests a slight dip in operational efficiency. Historically, PSA's gross margin remains comfortably above the industry median, which stood at 0.7419 in 2023 compared to 0.7459 for PSA. Hence, while the minor drop does not significantly alter PSA's competitive position, it underscores the necessity for vigilance in cost management. This indicator is assigned a score of 0 as per the Piotroski criterion.

Asset Turnover Ratio is growing?

Asset turnover ratio measures a company's efficiency in using its assets to generate revenue. A higher ratio indicates better performance.

Historical asset turnover ratio of Public Storage (PSA)

The asset turnover for Public Storage (PSA) has increased from 0.2394 in 2022 to 0.2418 in 2023, earning the company 1 point in the Piotroski analysis. This trend is positive as it reflects a slight improvement in the efficiency with which PSA utilizes its assets to generate revenue. Over the last 20 years, PSA's asset turnover has generally exhibited an upward trend, with a significant rise from 0.1784 in 2003 to 0.2418 in 2023, indicating consistent improvement in asset utilization efficiency.


Obligatory risk notice

We would like to point out that the contents of this website are for general information purposes only and do not constitute recommendations for the purchase or sale of specific financial instruments, and therefore do not constitute investment advice. In particular, marketstorylabs.com and its creators cannot assess the extent to which information / recommendations made on the pages correspond to your investment objectives, your risk tolerance and your ability to bear losses. Therefore, if you make any investment decisions based on information on the site, you do so solely on your own responsibility and at your own risk. This in turn means that neither marketstorylabs.com nor its creators are liable for any losses incurred as a result of investment decisions based on the information on the marketstorylabs.com website or other media used.