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Last update on 2024-06-05

Renault (RNL.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Renault (RNL.DE) achieved a strong Piotroski F-Score of 8/9 in 2023, indicating a stable financial position and positive growth prospects.

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: 8

We're running Renault (RNL.DE) 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?
1
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?
1
Asset Turnover Ratio is growing?
1

Renault (RNL.DE) achieved a high Piotroski F-Score of 8 out of 9, indicating a strong financial position based on profitability, liquidity, and operating efficiency. Notable criteria met include positive net income, significant cash flow from operations, increasing Return on Assets (ROA), superior cash flow to net income ratio, reduced outstanding shares, improved gross margin, and growing asset turnover ratio. However, Renault did not score on the leverage criterion due to increased borrowing, and there was a slight decrease in the current ratio.

Insights for Value Investors Seeking Stable Income

Given Renault's robust Piotroski F-Score of 8, it appears to be a solid candidate for investors looking for undervalued stocks with good financial health. However, potential investors should be cautious of the company's increasing leverage and slightly declining current ratio. Overall, Renault's upward profitability and strong operational metrics make it worth considering for further investment research.

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

Profitability of Renault (RNL.DE)

Company has a positive net income?

Net income criterion determines if a company is profitable, which is pivotal for its financial health and stability.

Historical Net Income of Renault (RNL.DE)

For Renault (RNL.DE), the net income of €2,198,000,000 in 2023 is positive, earning a score of 1 point in the Piotroski analysis. This indicates a profitable state for the current year. Historical data shows variability, stark losses in 2009 and 2020 contrasting with substantial profits in other years. Such variations necessitate the positive 2023 result, signaling potentially recovered or improved operations, crucial for long-term investor confidence.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses the cash a company generates from its regular business operations. It's pivotal in understanding the company's financial health.

Historical Operating Cash Flow of Renault (RNL.DE)

In 2023, Renault (RNL.DE) reported a positive Cash Flow from Operations (CFO) of €4,462,000,000. This value adds 1 point in the Piotroski score favorably. Over the last two decades, although Renault experienced a dip in 2008 with negative CFO, they have predominantly maintained positive cash flows, underscoring their operational resilience. The CFO trajectory, predominantly staying above the €3,000,000,000 mark post-2008, signals robust operational performance. Hence, the trend is positive.

Return on Assets (ROA) are growing?

ROA, or Return on Assets, is a profitability ratio that indicates how effectively a company is utilizing its assets to generate profits. An increasing ROA suggests better management efficiency.

Historical change in Return on Assets (ROA) of Renault (RNL.DE)

Renault's ROA increased significantly from -0.0031 in 2022 to 0.0183 in 2023, marking a noticeable improvement. This shift is positive and will score 1 point in the Piotroski analysis. It indicates a recovery and better profitability for the company. However, it still lies considerably lower than the industry median ROA of 0.1825 in 2023. Despite the relative underperformance, the positive trend is a step towards more competitive positioning in the future.

Operating Cashflow are higher than Netincome?

Criterion evaluates whether a company's operating cash flow is higher than its net income, indicating quality of earnings.

Historical accruals of Renault (RNL.DE)

For 2023, Renault's operating cash flow is €4,462 million compared to a net income of €2,198 million. This yields a positive point as operating cash flow exceeds net income. Historically seen, Renault generally maintains a higher operating cash flow against net income, signaling robust profit quality. With the exception of a few challenging years such as 2008 and 2019-2020, they demonstrate strong cash positioning reflective of solid operational efficiency. Summing up, Renault scores 1 point for this criterion in 2023, positively contributing to their Piotroski F-score.

Liquidity of Renault (RNL.DE)

Leverage is declining?

The change in leverage assesses the degree to which a firm uses borrowed money, and a decrease suggests improved financial stability.

Historical leverage of Renault (RNL.DE)

In 2023, Renault's leverage ratio increased to 0.0694 from 0.0871 in 2022. This increase in leverage indicates the firm is relying more on borrowed funds compared to the previous year, which can be interpreted as an increased risk. Historically, Renault's leverage has shown very low levels, with a significant jump visible around 2020. The increase in leverage from 2022 to 2023 points towards a more aggressive leveraging strategy. Thus, no points are awarded in the Piotroski analysis for this criterion.

Current Ratio is growing?

Change in Current Ratio: Compare the Current Ratio of 1.1078 in 2023 with the Current Ratio of 1.1193 in 2022 and check if Current Ratio increased or decreased. If the Current Ratio increased in 2023 add 1 point if not set it to 0.

Historical Current Ratio of Renault (RNL.DE)

Renault's current ratio slightly decreased from 1.1193 in 2022 to 1.1078 in 2023. This indicates a slight decline in the company's ability to cover its short-term liabilities with its short-term assets. Over the past 20 years, Renault's current ratio has fluctuated, reaching lows around 0.96-0.97 between 2005-2007, and peaking at 2.75 in 2004. The industry median current ratio shows a more stable trend, peaking at 1.53 in 2021 and maintaining an above 1 level consistently. Renault's ratios indicate a historical tendency to maintain liquidity around the industry median with some years outperforming, suggesting a cautious but generally steady approach to liquidity management. Given the slight decrease in 2023, we would rate this criterion as 0.

Number of shares not diluted?

The change in outstanding shares criterion measures whether the number of a company's shares has decreased year over year, which could indicate share buybacks, beneficial for current shareholders. Reduction approves capital allocation.

Historical outstanding shares of Renault (RNL.DE)

In 2022, Renault (RNL.DE) had 272,097,000 outstanding shares, which decreased to 271,009,000 in 2023. This reduction in outstanding shares is a positive trend because it suggests that Renault is engaging in share buybacks, which can improve earnings per share and return value to shareholders. Over the last 20 years, Renault's outstanding shares have shown fluctuations, demonstrating variable financial strategies and share issuance policies. For 2023, adding 1 point to Renault under this criterion is justified due to the reduced share count.

Operating of Renault (RNL.DE)

Cross Margin is growing?

Change in Gross Margin compares the company's current year gross margin against the previous year. It is crucial because gross margin reflects the core profitability of a company by considering the direct costs of producing its goods and services.

Historical gross margin of Renault (RNL.DE)

The Gross Margin for Renault in 2023 is 0.2093, reflecting an increase from 0.199 in 2022. This uptrend indicates improvement in the company's core profitability, which is a positive sign for Renault. Over 20 years, Renault has had an erratic gross margin trend, sometimes fluctuating significantly like 2012's 0.2476 down to 0.1789 in 2013. Nevertheless, for 2023, Renault's gross margin not only improved year-over-year but also exceeded the industrial median of 0.1825, signaling a robust position in the market. Adding 1 point for this criterion.

Asset Turnover Ratio is growing?

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

Historical asset turnover ratio of Renault (RNL.DE)

In 2022, Renault's asset turnover was 0.3993, whereas in 2023, it rose to 0.4361. This represents an increase, reflecting that Renault has been more efficient in utilizing its assets to generate revenue. The trend over the past 20 years shows fluctuations, but the recent rise from 0.3993 in 2022 to 0.4361 in 2023 earns Renault 1 point under Piotroski's criteria. This positive development is crucial given the company's historical downturns, especially noticeable between 2015 and 2021.


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