PTEN 10.22 (-1.54%)
US7034811015Oil & GasOil & Gas Drilling

Last update on 2024-06-07

Patterson-UTI Energy (PTEN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Patterson-UTI Energy's Piotroski F-Score Analysis 2023 highlights financial health (scoring 5/9) with insights on profitability, liquidity, and operating 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: 5

We're running Patterson-UTI Energy (PTEN) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a value between 0 and 9 to judge the financial strength of a company. Patterson-UTI Energy (PTEN) has a score of 5. 1. Profitability: PTEN shows improved profitability with a positive net income of $246.29 million in 2023. It also has positive cash flow from operations ($1,005.91 million) and operating cash flow higher than net income, indicating strong operating efficiency. 2. Liquidity: PTEN's leverage has decreased from 27.05% to 17.19%, signifying reduced debt reliance. However, the current ratio slightly fell from 1.5054 in 2022 compared to 1.4144 in 2023, suggesting a small decline in liquidity. 3. Operating Efficiency: PTEN's gross margin rose from 0.1198 to 0.1456, and their operating cash flow exceeds net income. However, the asset turnover ratio declined from 0.8678 to 0.785, indicating a reduction in efficiency. It also faces share dilution as outstanding shares increased from 215.93 million to 279.50 million.

Insights for Value Investors Seeking Stable Income

Patterson-UTI Energy (PTEN) shows mixed financial health with a Piotroski score of 5. Positive trends include profitable net income, positive cash flows, and improved gross margin. However, the company faces challenges with decreased liquidity and asset turnover ratio alongside share dilution. With a mixed but improving outlook, investors might consider PTEN for further investigation but should be cautious about its financial inconsistencies.

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

Profitability of Patterson-UTI Energy (PTEN)

Company has a positive net income?

Netincome is a crucial indicator of a company's profitability. Positive netincome shows profitability and can indicate a company's ability to generate profit from its operations.

Historical Net Income of Patterson-UTI Energy (PTEN)

For Patterson-UTI Energy (PTEN), the net income of $246.29 million in 2023 is notably positive. Given the company's checkered history with both negative and positive net incomes over the past two decades, this positive result indicates a significant turnaround from previous years of negative performance (e.g., -$654.55 million in 2020 and -$425.70 million in 2019). The positive net income therefore adds 1 point, signifying improved profitability and financial stability.

Company has a positive cash flow?

The criterion evaluates whether a company's Cash Flow from Operations (CFO) is positive for a given year.

Historical Operating Cash Flow of Patterson-UTI Energy (PTEN)

For Patterson-UTI Energy (PTEN), the CFO for 2023 stands at $1,005,914,000, which is a positive cash flow. This marks a notable trend considering the fluctuations in CEO over the past two decades. Historically, PTEN's CFO has oscillated, witnessing highs in years like 2006 ($837M) and lows such as in 2021 ($95M). In recent years, there's been a strong upward trajectory from $95M in 2021 to over USD 1 billion in 2023. This positive CFO trend for 2023 signals robust operational efficiency and effective cash management, adding 1 point to the Piotroski Score. This consistency in positive cash flows is essential for liquidity and ability to reinvest in business operations.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability relative to its total assets. A higher ROA indicates more efficient use of assets.

Historical change in Return on Assets (ROA) of Patterson-UTI Energy (PTEN)

The ROA for Patterson-UTI Energy has slightly decreased from 0.0507 in 2022 to 0.0466 in 2023, resulting in a score of 0 for this criterion. This indicates a small decline in the company's efficiency in generating profits from its assets over the year. Compared to the industry median ROA of 0.2698 for 2023, PTEN's ROA of 0.0466 suggests that the company is underperforming relative to its peers. Historically, PTEN's ROA has fluctuated, with the highest point in 2006 at 0.4959, and the lowest at -0.0265 in 2020, reflecting industry volatility and operational challenges over the past two decades.

Operating Cashflow are higher than Netincome?

Operating cash flow being higher than net income indicates that the company is able to generate sufficient cash from its operations to cover its net income, implying a good quality of earnings. It suggests operating efficiency and solid cash management strategies.

Historical accruals of Patterson-UTI Energy (PTEN)

For the year 2023, Patterson-UTI Energy (PTEN) reported an Operating Cash Flow of $1,005,914,000, which is substantially higher than its Net Income of $246,292,000. This results in adding 1 point for this criterion. Historically speaking, the company's operating cash flow has varied but often demonstrated resiliency even amid challenges, such as the dip in 2020 due to the pandemic. The figures corroborate PTEN's ability to convert earnings into actual cash, reflecting strong operational health and scalability.

Liquidity of Patterson-UTI Energy (PTEN)

Leverage is declining?

Change in leverage measures the shift in how much a company relies on debt to finance its assets. A decrease in leverage is generally good and raises the Piotroski score by 1 point, indicating financial prudence.

Historical leverage of Patterson-UTI Energy (PTEN)

Comparing the leverage ratio of 0.2705 in 2022 with 0.1719 in 2023 for Patterson-UTI Energy (PTEN), we see that leverage has decreased. This decline from 27.05% to 17.19% signifies reduced reliance on debt and improved financial stability, thus meeting the criterion to add 1 point. Historically, leverage ratios were at their peak of 29.43% in 2020, and have shown a declining trend since. This positive shift corroborates a prudent financial strategy.

Current Ratio is growing?

The current ratio measures a company's ability to pay its short-term obligations with its short-term assets. It is considered a key liquidity metric.

Historical Current Ratio of Patterson-UTI Energy (PTEN)

For 2023, Patterson-UTI Energy (PTEN) has a current ratio of 1.4144 compared to 1.5054 in 2022, which shows a decline in liquidity. This is a bad trend as it signifies a slight decrease in the company's ability to cover its short-term obligations with its short-term assets. Historically, the company's current ratio has seen larger declines and increases, but this year's decrease, while not drastic, is still noteworthy. The industry’s median current ratio stood at 1.5218 for 2023, which is higher than PTEN’s current ratio, indicating PTEN is less liquid compared to the industry standard. Therefore, this criterion scores 0 points.

Number of shares not diluted?

Change in Shares Outstanding refers to the variation in the number of shares a company has issued and is a valuable gauge for equity dilution or buyback activities.

Historical outstanding shares of Patterson-UTI Energy (PTEN)

The Outstanding Shares of Patterson-UTI Energy (PTEN) increased from 215,935,000 in 2022 to 279,501,000 in 2023, reflecting a growth of approximately 29.4%. This rise signifies potential dilution for existing shareholders. Over the last 20 years, the number of outstanding shares has generally fluctuated, soaring notably in 2017 and again in 2023. Such an increase suggests new equity has likely been issued, perhaps to raise capital for growth or reduce debt, potentially impacting the overall EPS and shareholder value. As the shares increased, this criterion scores 0 points.

Operating of Patterson-UTI Energy (PTEN)

Cross Margin is growing?

Gross margin is a key measure of operational efficiency and profitability, reflecting the proportion of revenue that exceeds the cost of goods sold.

Historical gross margin of Patterson-UTI Energy (PTEN)

The gross margin for Patterson-UTI Energy (PTEN) has increased from 0.1198 in 2022 to 0.1456 in 2023. This improvement signifies a positive trend as the company is retaining a larger portion of its revenue as gross profit despite industry challenges. The industry median gross margin for 2023 is 0.2698, indicating that while PTEN is improving, it is still below the industry benchmark. Over the past 20 years, PTEN has experienced substantial volatility in its gross margin, with the current level marking a recovery from negative margins in previous years. Nonetheless, given the increase from 2022 to 2023, PTEN earns a point for this criterion.

Asset Turnover Ratio is growing?

The asset turnover ratio is a measure of a firm's efficiency in using its assets to generate revenue. A higher ratio indicates better performance.

Historical asset turnover ratio of Patterson-UTI Energy (PTEN)

In 2023, Patterson-UTI Energy (PTEN) had an asset turnover ratio of 0.785, which is a decrease compared to the 0.8678 ratio in 2022. This decline signifies a worsening in how efficiently the company is utilizing its assets to generate sales. Over the past 20 years, the asset turnover ratio has shown volatility but has generally ranged from lows around 0.2197 to highs of 1.277. Given the decline from 2022 to 2023, the trend for this specific criterion is negative, receiving a score of 0.


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