Last update on 2024-06-07

PTC (PTC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Explore PTC's Piotroski F-Score Analysis for 2023, evaluating profitability, liquidity, and operational efficiency. Final score: 4/9.

Short Analysis - Piotroski Score: 4

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

The Piotroski F-Score is a measure to gauge a company's financial strength, ranging from 0 to 9. For PTC (PTC), the score is 4, based on evaluations of profitability, liquidity, and operating efficiency. Consider the following key points: - Profitability: PTC has a positive net income and cash flow, showing recent improved trends. However, the ROA has declined, which is concerning. - Liquidity: The company's leverage decreased, indicating better stability, but the current ratio fell, suggesting a risk in meeting short-term obligations. - Operations: Gross margin and asset turnover ratios both decreased, hinting at potential inefficiencies. Historical data highlights some fluctuations but decent recent improvements overall.

Insights for Value Investors Seeking Stable Income

Given that PTC has a middle-range Piotroski F-Score of 4, it presents both positive and negative aspects. Positive points include consistent profitability and cash flow. However, declining ROA, current ratio, and asset turnover indicate some areas of concern. For cautious investors, further investigation into management efficiency and short-term liquidity might be necessary before making any investment decisions. Keep an eye on trends in efficiency metrics and how new share issuances are utilized. Overall, it might be worthy to consider, but approach with thoughtful research.

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

Profitability of PTC (PTC)

Company has a positive net income?

The criterion checks if the company has a positive net income for the year. A positive net income indicates profitability, which is crucial for assessing the company's financial health.

For 2023, PTC's net income stands at $245.54 million, which is positive. Hence, we add 1 point under the Piotroski Analysis for this criterion. Upon reviewing the historical data from the past 20 years, it shows that the net income for PTC has been volatile. The company reported losses in several years, such as 2012, 2016, and 2018. However, the recent trend appears promising, with significant positive net incomes in recent years, such as 2020 and 2021. This upward trend in net income reflects improved profitability and operational efficiency for the company.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the surplus of cash generated from a company’s core business operations.

PTC has reported a CFO of $610.861 million for 2023, which is positive. This is a good sign as it indicates robust operational efficiency. Looking at the last 20 years' data, the CFO has generally been increasing, with only minor fluctuations, showcasing consistent business performance. Hence, it garnered 1 point for this criterion. The spikes in CFO in 2008, 2012, and continuous growth from 2021 indicate strengthening financial health.

Return on Assets (ROA) are growing?

Change in ROA measures how effectively a company is using its assets to generate earnings by comparing the Return on Assets (ROA) from one period to another. An increase in ROA implies improved management efficiency.

Comparing the ROA from 2023 (0.0447) to the ROA from 2022 (0.0681) for PTC (PTC), we observe a decrease in ROA. Thus, we assign a score of 0 for this criterion. This trend indicates a less efficient use of assets in generating earnings in 2023. Over the past 20 years, PTC's operating cash flow has grown significantly, reflecting a broader timeframe performance, yet the 2023 decline in ROA compared to 2022 suggests an area needing improvement in asset utilization efficiencies. The industry's median ROA remains significantly higher, with 2023 sitting at 0.6741, demonstrating that PTC's ROA underperforms against industry benchmarks.

Operating Cashflow are higher than Netincome?

To check if the operating cash flow is higher than the net income, you need to subtract net income from operating cash flow. If the result is positive, it indicates that the company is generating more cash than accounting profits, which is a strong signal of financial health. This is important because cash flow is less prone to manipulation via accounting practices than net income.

For PTC (PTC) in 2023, the operating cash flow is $610,861,000 and the net income is $245,540,000. Subtracting net income from operating cash flow gives a difference of $365,321,000, which is significant. This result is positive, adding 1 point to this criterion under Piotroski's analysis. The historical analysis of the last 20 years shows a consistent pattern where operating cash flow often exceeds net income. For instance, in 2013, operating cash flow was $224,683,000 compared to a net income of $143,769,000, also indicating greater cash flow. The trends suggest operational efficiency in generating cash, buttressing investor confidence in PTC's financial reporting.

Liquidity of PTC (PTC)

Leverage is declining?

Change in Leverage is assessed by comparing the leverage ratios year over year to determine if the company's financial leverage is increasing or decreasing.

Upon examining the leverages of PTC (PTC) for the years 2022 and 2023, one observes that the leverage decreased from 0.3239 in 2022 to 0.2949 in 2023. Over the last 20 years, PTC’s leverage has fluctuated but has not exceeded 0.3595. The downward trend is positive as it indicates lower dependency on debt. This past year's decrease adds 1 point under Piotroski’s criteria, suggesting improved financial stability.

Current Ratio is growing?

The Current Ratio criterion checks if the firm's ability to pay short-term obligations has improved.

PTC's Current Ratio decreased from 1.3489 in 2022 to 0.7643 in 2023, contrary to the required increase for a point. This suggests lower short-term liquidity and higher risk in meeting short-term liabilities, significantly so, given the Industry Median of 1.7519.

Number of shares not diluted?

Change in shares outstanding is pivotal as it reflects dilution risk, which can impact shareholder value and earnings per share, by comparing current with past shares.

In 2022, PTC had 117,194,000 outstanding shares, which increased to 118,341,000 in 2023. This increment indicates the issuance of new shares, which could signal potential dilution. This trend results in less attractive value prospects for shareholders, warranting the assignment of 0 points for this criterion. An increased share count can lead to dilution, decreasing the value of existing shares and potentially affecting earnings per share negatively. For instance, issuing new shares without proportional growth in earnings can dilute the stake of current shareholders. In the long-term context provided, PTC's outstanding shares have followed a fluctuating trend from 106,248,649 in 2003 to the current 118,341,000 in 2023. While the increase in recent years might be aimed at raising capital, it's crucial to monitor how this capital is being used.

Operating of PTC (PTC)

Cross Margin is growing?

Gross margin is a company's net sales revenue minus its cost of goods sold, divided by net sales revenue. It is important because it indicates the efficiency with which a company produces and sells its products.

In 2023, PTC's gross margin stood at 0.7897, compared to 0.8004 in 2022. This represents a slight decrease. This decline in gross margin, although minor, suggests that PTC (PTC) may be facing increased production costs or pricing pressures. A declining gross margin is typically seen as a negative trend, especially when assessed alongside past performance data. Historically, PTC has maintained gross margins higher than the industry median, which was 0.6741 in 2023. Given the sustained above-median performance, the recent decline does not dramatically shake investor confidence; however, vigilance is crucial to ensuring that this does not become a concerning trend. For the Piotroski Score, this would mean no point awarded in this criterion.

Asset Turnover Ratio is growing?

Change in asset turnover indicates how effectively a company is using its assets to generate sales. An increase is considered favorable.

Given PTC's asset turnover ratio of 0.3821 in 2023 compared to 0.4205 in 2022, it is evident that the asset turnover has decreased. This decreasing trend suggests that PTC is becoming less efficient in using its assets to generate revenue, which can be concerning for stakeholders. Adding historical context, the asset turnover has been on a consistent decline for over a decade since peaking at 1.0728 in 2003. This persistent downward trend underlines potential systemic issues within PTC's operational efficiency. Therefore, for the Piotroski analysis, this criterion would score 0 points as the asset turnover ratio has not improved.