Last update on 2024-06-07

Sinclair Broadcast Group (SBGI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Read the detailed Piotroski F-Score analysis of Sinclair Broadcast Group (SBGI) for 2023. Discover its financial health with a final score of 4 out of 9.

Short Analysis - Piotroski Score: 4

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

The Piotroski F-Score assesses Sinclair Broadcast Group (SBGI) based on 9 criteria including profitability, liquidity, and operational efficiency, giving them a score of 4 out of 9. Profitability indicators are mixed: SBGI reported a significant net loss in 2023, although its cash flow from operations is positive. Liquidity indicators also show concerns, with increased leverage and a declining current ratio. Operationally, there's a decline in gross margin but an increase in asset turnover and reduced share dilution, indicating some efficiency. SBGI's fluctuating history and unstable earnings highlight potential risks.

Insights for Value Investors Seeking Stable Income

Based on a Piotroski F-Score of 4, Sinclair Broadcast Group (SBGI) shows some worrying signs, especially with its negative net income and declining gross margin. The company has some positives, like positive cash flow and efficient use of assets, but the mixed results make it a risky investment. Potential investors should proceed with caution, considering undertaking deeper research or waiting for more stable financial improvements before investing.

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

Profitability of Sinclair Broadcast Group (SBGI)

Company has a positive net income?

Net income reflects a company's profitability. A positive net income is indicative of a company's ability to generate profit, whereas a negative net income could signify financial trouble.

For 2023, Sinclair Broadcast Group (SBGI) reported a net income of -$291 million, which is negative. This results in a score of 0 for this criterion. Reviewing historical data, it is clear that SBGI has experienced significant fluctuations in net income. With substantial negative dips observed in 2008 (-$241 million) and 2020 (-$2.41 billion) but also remarkable highs like in 2021 ($2.65 billion). This erratic earnings pattern suggests instability, potentially making it a risky investment. Therefore, the current negative net income for 2023 is a concerning trend.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a critical indicator of a company's financial health, measuring the cash a company generates from its typical business operations.

Sinclair Broadcast Group (SBGI)'s CFO for 2023 is $235 million, which is positive. Over the last 20 years, the company has experienced fluctuations in its CFO, ranging from as low as $54.5 million in 2005 to as high as $1.548 billion in 2020. Consistently generating positive cash flow from operations is crucial for a company's sustainability and growth. The positive CFO in 2023 adds 1 point according to the Piotroski Analysis criteria, indicating a solid performance in this regard.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures the rate of improvement in a company's profitability relative to its total assets.

For Sinclair Broadcast Group (SBGI) in 2023, the ROA stood at -0.0455 compared to 0.2756 in 2022. Such a significant drop in ROA from 2022 to 2023 indicates a deterioration in the company's ability to generate profit from its assets, leading to a score of 0 in this criterion. Over the past 20 years, SBGI's ROA has shown considerable volatility but never matched the industry median ROA, which ranges from 0.4008 to 0.5076. The drastic fall contrasts with the industry performance and raises concerns about SBGI's operational efficiency and profitability trends.

Operating Cashflow are higher than Netincome?

This criterion assesses the relationship between operating cash flow and net income for Sinclair Broadcast Group (SBGI) and emphasizes its significance in evaluating earnings quality. It is essential because a higher operating cash flow than net income may indicate strong cash earnings and earnings quality.

For Sinclair Broadcast Group (SBGI) in 2023, the operating cash flow of $235 million is substantially higher than the net income of -$291 million. This is quite a positive sign as it suggests that the company is generating solid cash flow from its operations, even though it reported a net loss. Examining the additional data, SBGI's operating cash flow has generally been robust over the past 20 years, experiencing significant peaks, such as in 2020 with $1.548 billion. In contrast, net income has been more fluctuating with notable highs and lows, like the staggering loss in 2020 of -$2.414 billion and a significant profit in 2022 of $2.652 billion. This substantial cash flow relative to net income suggests better earnings quality and reliability. Therefore, this criterion merits a score of 1 point.

Liquidity of Sinclair Broadcast Group (SBGI)

Leverage is declining?

The Change in Leverage criterion examines whether the company's leverage has increased or decreased year-over-year, rewarding decreases as they signify lower financial risk.

For Sinclair Broadcast Group (SBGI), leverage has increased from 0.6535 in 2022 to 0.7052 in 2023. This represents a rise in the company's financial risk, as higher leverage indicates a higher reliance on debt to finance activities. Historically, the leverage trend has shown fluctuations with significant high levels observed in 2008 (0.719) and 2009 (0.8279), as well as an exceptionally low leverage in 2012 (0.006). Given the recent incremental increase, Sinclair Broadcast Group does not earn a point for this criterion.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities. This ratio is important as it indicates the company's ability to pay off its short-term liabilities with its short-term assets.

The Current Ratio for Sinclair Broadcast Group (SBGI) decreased from 2.7681 in 2022 to 1.3373 in 2023. This represents a significant decline of more than 50%. [In the 20-year historical context, this is one of the lowest points for SBGI, only surpassed by the ratios in 2005 and 2010, (0.9925 and 0.9898 respectively).] Comparatively, the industry median current ratio stood at 1.5175 in 2023, which is higher than SBGI's current ratio. Considering these points, Sinclair Broadcast Group does not earn a point for this criterion.

Number of shares not diluted?

Change in Shares Outstanding refers to the difference in the number of shares that a company has issued in a given period. It's crucial because an increase in shares typically dilutes existing shareholders' stakes, while a decrease might signify positive management actions like buybacks.

Examining Sinclair Broadcast Group's outstanding shares, we observe a decrease from 70,653,000 in 2022 to 65,125,000 in 2023. This reduction of approximately 5.88% is viewed positively as it suggests that the company may have undertaken share buybacks, a common tactic to return value to shareholders by reducing supply. The 20-year trend shows fluctuations, with significant decreases particularly noticeable post-2018. In the context of the Piotroski analysis, this change certainly earns Sinclair Broadcast Group a point (1), as the decrease in outstanding shares is a favorable indicator of potential management confidence and shareholder value enhancement.

Operating of Sinclair Broadcast Group (SBGI)

Cross Margin is growing?

Change in Gross Margin compares a firm's gross margin over two years. Gross margin is the difference between revenue and cost of goods sold divided by revenue, indicating production efficiency and profitability.

For Sinclair Broadcast Group (SBGI), the gross margin in 2023 stands at 0.4703, compared to 0.4944 in 2022. This indicates a decline, thus we assign a score of 0 points for this criterion. This downward trend warrants concern as maintaining or improving gross margin is critical for profitability. When plotted historically, SBGI's gross margin shows considerable fluctuations, particularly a sharp dip in 2021 (0.2912). Comparatively, the industry median gross margin has been relatively stable; in 2023, the median is 0.4493. While SBGI's gross margin still exceeds the industry median for 2023, the downward trend is disadvantageous. This decrease might suggest inefficiencies or rising costs that SBGI should evaluate and address for sustaining competitive advantage.

Asset Turnover Ratio is growing?

The Change in Asset Turnover analyzes the company's efficiency in using its assets to generate revenue, important for assessing operational performance.

For Sinclair Broadcast Group (SBGI), the asset turnover ratio increased from 0.4082 in 2022 to 0.4901 in 2023. This positive shift suggests that SBGI has become more efficient in utilizing its asset base to generate revenue, earning 1 point for this criterion. Over the past 20 years, the asset turnover ratio shows variability, reaching the highest value in 2023. Such growth is crucial for the company's profitability, indicating improvements in asset utilization strategies and possibly tighter cost controls.