REG 66.68 (-0.21%)
US7588491032REITsREIT - Retail

Last update on 2024-06-05

Regency Centers (REG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyzing Regency Centers (REG) Piotroski F-Score of 5/9 for 2023, covering 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 Regency Centers (REG) 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?
0
Asset Turnover Ratio is growing?
1

Regency Centers (REG) has a Piotroski F-Score of 5 out of 9. This score indicates a moderate financial position based on nine criteria focusing on profitability, liquidity, and operational efficiency. - Profitability: Positive net income (+1), positive cash flow from operations (+1), ROA is decreasing (0), and operating cash flow is higher than net income (+1). - Liquidity: Decreasing leverage (+1), declining current ratio (0), and increasing shares outstanding (0). - Efficiency: Declining gross margin (0) and slightly improved asset turnover (+1). While Regency Centers shows strengths in profitability with positive net income and cash flows, it faces challenges in liquidity and some aspects of operational efficiency like ROA and gross margin.

Insights for Value Investors Seeking Stable Income

Given Regency Centers' moderate Piotroski F-Score of 5, it demonstrates a balance of strengths and weaknesses. Though it shows good profitability, its liquidity metrics and efficiency aspects like the current ratio and gross margin need attention. Investors might find REG a worthwhile consideration but should be cautious of the highlighted issues. Conduct deeper due diligence especially into liquidity and efficiency concerns before making investment decisions.

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

Profitability of Regency Centers (REG)

Company has a positive net income?

Net income is a critical measure of a company's profitability over a specified period. Positive net income indicates the company is making more money than it spends.

Historical Net Income of Regency Centers (REG)

In 2023, Regency Centers (REG) reported a net income of $364,557,000, which is positive. This continues a trend of positive net income over the past several years, indicating consistent profitability. Positive net income is a favorable sign and aligns with strong performance indicators. Therefore, this criterion adds 1 point to the Piotroski score for Regency Centers.

Company has a positive cash flow?

Evaluating cash flow from operations is crucial as it indicates the financial health and core operational efficiency of the company.

Historical Operating Cash Flow of Regency Centers (REG)

For 2023, Regency Centers (REG) showcases a positive cash flow from operations (CFO) amounting to $719,591,000. This upward trend in CFO not only secures a Piotroski point but also reflects robust financial health. Over a 20-year span, REG has evolved significantly from $227.88 million in 2003 to $719.591 million in 2023, underscoring steady growth. A closer inspection reveals intermittent fluctuations, notably a marked rise post-2018, maintaining levels above $600 million. This positive and consistent trajectory in CFO hints at solid operational and income efficiency, reducing liquidity risks and aiding in effective capital allocation.

Return on Assets (ROA) are growing?

Comparing the Return on Assets (ROA) year-over-year helps assess how efficiently management is using the company's assets to generate earnings. An increase suggests improved efficiency.

Historical change in Return on Assets (ROA) of Regency Centers (REG)

The Return on Assets (ROA) for Regency Centers (REG) decreased from 0.0446 in 2022 to 0.0313 in 2023. This represents a downturn in asset efficiency for 2023 and results in adding 0 points for this criterion. Historically, REG's operating cash flow has shown robust growth over the last 20 years, with figures rising from 227.88 million USD in 2003 to 719.59 million USD in 2023. Despite this, the Industry Median ROA over the same period has significantly outpaced REG's performance, with values consistently above 0.5. This stark contrast underscores a persistent challenge in matching industry efficiency standards.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income. This criterion ensures that the company is able to generate sufficient cash from its operating activities, which reduces reliance on debt or equity financing to cover its profit shortfall. This is significant for detecting potential earnings manipulation.

Historical accruals of Regency Centers (REG)

For the year 2023, Regency Centers (REG) had an Operating Cash Flow of $719.59 million compared to a Net Income of $364.56 million. Since the Operating Cash Flow is greater than the Net Income, this adds 1 point for Regency Centers based on the Piotroski analyses criteria. This trend indicates strong operational efficiency and a quality of earnings, suggesting that the company is effectively converting sales into actual cash. Over the past 20 years, this trend appears to be consistent with positive P/CF values each year, indicating sound fiscal management and operational health. Such consistency is crucial as it points towards the sustainable cash-generating capabilities of the firm. This metric is good and supports a higher Piotroski score.

Liquidity of Regency Centers (REG)

Leverage is declining?

This criterion examines whether there has been a reduction in the company's financial leverage over the past year, indicating that the company is decreasing its reliance on debt to fund its operations.

Historical leverage of Regency Centers (REG)

Upon comparing the leverage ratios of Regency Centers in 2022 (0.3955) and 2023 (0.3739), we observe a decrease in leverage from 0.3955 to 0.3739. Originally, it was assessed that leverage increased in 2023, however, the figures show a decline instead. Therefore, a point should be awarded, making this a favorable signal in assessing the firm's financial health. Lower leverage suggests that the company is improving its balance sheet strength and reducing risk. Notably, when contextualized over the last 20 years, the leverage ratio in 2023 is one of the lowest recorded, reflecting positively on fiscal prudence.

Current Ratio is growing?

Change in Current Ratio examines whether a company has improved its ability to pay short-term obligations. A higher Current Ratio indicates better short-term financial health.

Historical Current Ratio of Regency Centers (REG)

When analyzing Regency Centers (REG), we observe a decrease in the Current Ratio from 0.8121 in 2022 to 0.6367 in 2023. This trend is concerning as it signifies REG's diminished ability to cover its short-term liabilities, resulting in a score of 0 points in this criterion. This decline is particularly noteworthy when placed against the industry median current ratio, which has risen from 0.8911 in 2022 to 1.1846 in 2023. This discrepancy highlights a growing gap between REG's liquidity management and the industry norm, suggesting competitive disadvantages.

Number of shares not diluted?

Change in shares outstanding refers to the difference in the number of shares a company has issued between two periods, reflecting share buybacks or new issuance.

Historical outstanding shares of Regency Centers (REG)

In 2023, the shares outstanding for Regency Centers (REG) increased from 171,404,000 in 2022 to 176,085,000, reflecting a rise of 4,681,000 shares or approximately 2.73%. Historically, the number of shares has shown a climbing trend with the most significant jump between 2016 to 2017 due to a large issuance. An increase in outstanding shares can dilute an investor's ownership and earnings per share (EPS), hence scoring 0 for this criterion.

Operating of Regency Centers (REG)

Cross Margin is growing?

Gross Margin measures the efficiency of a company's core activities by showing the proportion of revenue remaining after accounting for production costs. Higher margins often indicate better cost efficiency.

Historical gross margin of Regency Centers (REG)

The Gross Margin for Regency Centers (REG) decreased from 0.7174 in 2022 to 0.7015 in 2023. Hence, for this particular criterion, REG scores 0 points. Over the last 20 years, while experiencing some periods of significant margins, particularly between 2008 and 2017, Regency Centers has exhibited a declining trend in recent years. For perspective, the industry's median gross margin also slightly decreased from 0.7122 in 2022 to 0.7072 in 2023, indicating that REG's performance is somewhat in line with broader industry trends. However, a lower Gross Margin remains unfavorable and suggests a pressing need to enhance cost management.

Asset Turnover Ratio is growing?

The Change in Asset Turnover criterion evaluates whether a company is utilizing its assets more efficiently to generate sales by comparing the current year's turnover ratio to the previous year's ratio.

Historical asset turnover ratio of Regency Centers (REG)

In 2023, Regency Centers (REG) recorded an Asset Turnover of 0.1136, slightly higher than the 0.1131 recorded in 2022. This increment from 0.1131 in 2022 to 0.1136 in 2023 suggests a marginal improvement in REG's efficiency at utilizing its assets to generate sales. Therefore, under the Piotroski Analysis, Regency Centers would earn 1 point for this criterion. Historically, the company's asset turnover shows some fluctuations; notable years include 2014's peak of 0.1326 and a low of 0.0921 in 2020. Despite significant year-to-year variations over the last 20 years, REG's latest data indicates a very modest but positive trend in asset utilization efficiency, which is seen as a good sign for the company's operating performance.


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