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Last update on 2024-06-07

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

Randstad's Piotroski F-Score for 2023 is 5/9, indicating moderate financial health. Analysis includes 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 Randstad (RAND.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?
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?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The analysis on Randstad (RAND.AS) using the Piotroski F-Score reveals the following: This company scored a 5 out of 9, indicating a balanced financial health position. While the company enjoyed positive net income (€624 million) and a healthy Cash Flow from Operations (€1,194 million), both of these are indeed strong indicators of financial strength and profitability. However, there's a growing ROA, leverage increased slightly, the company's current ratio decreased, and the gross margin and asset turnover witnessed minor declines. Additionally, Randstad bought back shares thereby reducing dilution. Although some criteria yielded positive outcomes, areas like profitability efficiency and liquidity require closer attention and improvement.

Insights for Value Investors Seeking Stable Income

Given its balanced financial position, this stock presents a moderate investment opportunity. Investors might appreciate the consistent profitability and strong cash flows. Nonetheless, they should also consider the declining ROA, increased leverage, lower current ratio, and marginally decreasing gross margin and asset turnover ratios. Potential investors should continue to monitor these financial metrics and consider Randstad if these areas improve.

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

Profitability of Randstad (RAND.AS)

Company has a positive net income?

Net income is a key profitability metric indicating the total earnings of a company. A positive net income reflects the company's ability to generate more revenue than its expenses, critical for both growth and shareholder value.

Historical Net Income of Randstad (RAND.AS)

Randstad's net income in 2023 stands at €624 million, a substantial figure and indeed positive. Compared to the previous years, this figure, though lower than the €929 million in 2022, still signifies robust profitability. Over the last two decades, you can observe that although there have been fluctuations, Randstad has managed to maintain a positive net income for most years. Except for 2008 and minor declines during economic downturns, the trend predominantly shows successful revenue generation over expenses. Therefore, Randstad earns 1 point for a positive net income in 2023.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the amount of cash generated by a company's regular business operations. It is important because positive CFO indicates that the company is able to generate sufficient cash from its core operations to maintain and grow its business.

Historical Operating Cash Flow of Randstad (RAND.AS)

For Randstad (RAND.AS), the CFO in 2023 was €1,194 million, which is positive. This is significant as it suggests the company has a robust cash-generating capability from its core business activities. In addition, when we examine the last two decades, Randstad has consistently demonstrated an upward trend in CFO, peaking in recent years (2020: €1,462 million, 2021: €914 million, 2022: €1,073 million, and 2023: €1,194 million). This sustained positive cash flow underlines the firm's financial strength and stability. As a result, according to the Piotroski analysis, Randstad earns 1 point for having a positive CFO in 2023.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) assesses how efficiently a company is using its assets to generate earnings compared to the previous year.

Historical change in Return on Assets (ROA) of Randstad (RAND.AS)

The ROA for Randstad (RAND.AS) decreased from 0.0839 in 2022 to 0.0573 in 2023. This decline signals a reduction in the company’s efficiency in generating earnings from its assets. Over the past 20 years, Randstad has seen varying ROA levels, generally below the industry median ROA which has consistently been above 0.3. The industry's performance and Randstad’s historical data suggest that this downward trend in ROA is a negative indicator, setting the points to 0 for this criterion.

Operating Cashflow are higher than Netincome?

This criterion checks if the company is generating more cash from its operations than it is reporting as net income. This is important because it can indicate the quality of earnings, as cash flow is less prone to manipulation compared to net income.

Historical accruals of Randstad (RAND.AS)

For the year 2023, Randstad's operating cash flow is €1,194 million compared to a net income of €624 million. This situation is favorable, earning a point for this criterion. Over the past 20 years, Randstad has shown a varied relationship between operating cash flow and net income. However, in many years, operating cash flow has been higher, which may indicate robust cash management and less reliance on accounting adjustments. The accruals data supports this by showing relatively stable trends. The result of operating cash flow being higher than net income in 2023 suggests strong operational efficiency.

Liquidity of Randstad (RAND.AS)

Leverage is declining?

Leverage indicates the amount of debt a company uses to finance its assets. A decreasing leverage ratio is generally favorable as it suggests lower reliance on debt.

Historical leverage of Randstad (RAND.AS)

The leverage of Randstad has increased from 0.0457 in 2023 compared to 0.08 in 2022. In this scenario, we set 0 points because higher leverage indicates an increased reliance on debt, which could pose higher financial risk. Reviewing the company's leverage over the last 20 years shows that the current leverage of 0.0457 is relatively low, especially when compared to peaks like 0.311 in 2008. However, the year-over-year increase suggests increased financial risk in 2023, even though the absolute level remains low.

Current Ratio is growing?

The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets. It's a liquidity ratio that is essential in evaluating a company's short-term financial health. A higher current ratio typically indicates better liquidity and financial stability.

Historical Current Ratio of Randstad (RAND.AS)

For Randstad (RAND.AS), the current ratio has decreased from 1.2369 in 2022 to 1.1133 in 2023. This results in a score of 0 for this criterion under the Piotroski analysis. A decreasing current ratio suggests that Randstad's short-term financial health has slightly worsened. When compared to the industry median current ratio, which was 1.3723 in 2023, Randstad's current ratio is below the industry median, indicating that the company might face more challenges in meeting its short-term liabilities compared to its industry peers. Over the last 20 years, Randstad's current ratio has remained relatively stable, with fluctuations from 1.0144 in 2019 to 1.3286 in 2021. However, it consistently stays below the industry median, which requires attention from both management and potential investors. The trend observed in 2023 could be a signal for the company to strengthen its liquidity position to avoid further short-term financial distress.

Number of shares not diluted?

Evaluating the change in shares outstanding helps in understanding whether a company is diluting shares or buying back shares, impacting shareholder value.

Historical outstanding shares of Randstad (RAND.AS)

Over the course of 2022 to 2023, Randstad observed a decrease in outstanding shares from 182,800,000 to 178,400,000. Contrary to the initial statement, this change indicates a reduction, thus earning +1 point in the Piotroski analysis. Analyzing the 20-year trend, Randstad's outstanding shares have fluctuated, with a peak during 2008 at 359,310,000, followed by a significant drop in 2019. This recent decrease suggests the company's commitment to boosting shareholder value through share buybacks. This is a positive trend for investors looking for appreciation in existing shares, resulting in a stronger investment outlook.

Operating of Randstad (RAND.AS)

Cross Margin is growing?

The Gross Margin percent measures a company's manufacturing and distribution efficiency during the production process. In evaluating Randstad, a Gross Margin analysis indicates how much of every euro earned is retained after incurring direct costs related to producing the goods.

Historical gross margin of Randstad (RAND.AS)

The Gross Margin for Randstad shows a slight decrease from 0.2086 in 2022 to 0.2076 in 2023. Although a minimal change, this marks a decrease, resulting in a score of 0 for this criterion. In comparison, as observed in the latest 20-year data, this decline contrasts with a relatively stable or slightly improving long-term trend in recent years. However, it's pivotal to acknowledge that despite this minimal decline, the Gross Margin closely aligns with the company's historical performance while remaining below the industry median. A higher industry median (0.3223) in 2023 underscores competitive pressures and efficiency challenges within the sector. Randstad must enhance cost controls and improve efficiency to bolster future Gross Margins.

Asset Turnover Ratio is growing?

Change in Asset Turnover involves comparing the ratio between two periods, reflecting the efficiency with which a firm uses its assets to generate revenue.

Historical asset turnover ratio of Randstad (RAND.AS)

The Asset Turnover ratio for Randstad has decreased from 2.4893 in 2022 to 2.3332 in 2023. This decline suggests a slight decrease in the efficiency with which the company is using its assets to generate revenue. Looking at historical data over the last 20 years, it is evident that the asset turnover has experienced fluctuations, notably peaking in 2006 at 3.3554 and hitting its lowest point in 2009 at 1.7488. Therefore, for 2023, we should assign a score of 0 for the Asset Turnover criterion.


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