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Last update on 2024-06-07

Sixt (SIX2.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 2/9)

Piotroski F-Score analysis of Sixt (SIX2.DE) for 2023, detailing financial health with a final score of 2/9. Insight into net income, cash flow, ROA, and more.

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: 2

We're running Sixt (SIX2.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?
0
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is designed to evaluate a company's financial strength on a scale of 0 to 9, covering aspects of profitability, liquidity, and operational efficiency. For Sixt (SIX2.DE), the score is 2 out of 9, indicating some caution. An analysis made through Piotroski's criteria reveals the following: Profitability: - Positive net income in 2023 (€335,139,000), scoring 1 point. - Negative cash flow from operations in 2023 (-€90,069,000), hence 0 points. - ROA decreased from 0.0766 in 2022 to 0.0559 in 2023. - Operating cash flow is less than net income, scoring 0 points. Liquidity: - Leverage increased from 0.2931 in 2022 to 0.3255 in 2023, 0 points. - Current ratio decreased from 2.5798 in 2022 to 2.4541 in 2023, scoring 0 points. Operational Efficiency: - Number of outstanding shares unchanged, representing no points. - Gross margin decreased from 0.8013 in 2022 to 0.7855 in 2023. - Asset turnover slightly decreased from 0.6088 in 2022 to 0.6034 in 2023. Sixt demonstrates positive profitability but might need to improve on cash flows, leverage, and margin management.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 2, Sixt (SIX2.DE) appears to have some financial strengths but also several weaknesses. This low score advises investors to proceed with caution. Key issues include negative cash flows from operations, increasing leverage, and declining operational efficiency. If you're considering investing in Sixt, it might be worthwhile to look deeper into their financial plans for enhancing cash flow, managing debt, and improving margins before making a decision. Overall, while Sixt shows potential, it's crucial to carefully assess these risk factors in view of long-term goals.

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

Profitability of Sixt (SIX2.DE)

Company has a positive net income?

Net income is one of the primary indicators of profitability. A positive net income signals that a company is profitable after all expenses are deducted.

Historical Net Income of Sixt (SIX2.DE)

The net income for Sixt in 2023 is €335,139,000, which is positive. This continues a trend of positive net income in recent years, with the exception of 2020 where the net income was negative. This positive net income adds 1 point to the Piotroski score, indicating that Sixt remains financially sound and profitable. Overall, this trend is good, demonstrating consistent profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses the inflow and outflow of cash from the core business activities and helps gauge the company's ability to generate sufficient cash to maintain or grow its operations.

Historical Operating Cash Flow of Sixt (SIX2.DE)

For Sixt (SIX2.DE), the CFO in 2023 stands at -€90,069,000. This negative cash flow signals challenges in covering operational costs from core business activities. Over the last 20 years, Sixt's CFO has fluctuated, showing both positive and negative figures. Notably, certain years such as 2010 (€486,446,000) and 2019 (€669,281,000) saw substantial positive cash flows, contrasting with significant negative figures in years like 2015 (-€454,053,000). This volatility in CFO might raise concerns about the company's ability to consistently generate operational cash. Given the 2023 number, we assign 0 points for this criterion. Overall, the trend signals inconsistency, which could warrant further examination of Sixt's operational efficiency and cash generation strategies.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) assesses the improvement in the effective utilization of a company’s assets to generate earnings, highlighting operational efficiency and profitability dynamics.

Historical change in Return on Assets (ROA) of Sixt (SIX2.DE)

Sixt's ROA decreased from 0.0766 in 2022 to 0.0559 in 2023, representing a decline. This suggests a reduction in the company’s efficiency in utilizing its assets to generate profits. In contrast, the industry median ROA exhibits relatively higher and stable levels, maintaining values around 0.4056 in 2023. Such divergence implies that Sixt might be facing operational challenges or inefficiencies compared to broader industry benchmarks. Historically, Sixt’s ROA trend has shown considerable volatility, with the value peaking sporadically and reflecting a mix of high and negative operational cashflows across the last two decades. For example, significant positive operational cashflows like 595,218,000 in 2009 coincided with noticeable leaps in ROA.

Operating Cashflow are higher than Netincome?

The 'Operating Cash Flow higher than Net Income' criterion assesses whether a company generates sufficient cash from its operations to cover its net income. This is important because operating cash flow reflects the company's real liquid earnings ability and avoids the distortions caused by non-cash items.

Historical accruals of Sixt (SIX2.DE)

As of 2023, Sixt's operating cash flow was -90,069,000 EUR, while net income was significantly higher at 335,139,000 EUR. This gap, where operating cash flow is lower than net income, is a concerning indicator. It suggests that the company is not generating enough cash from core operations to cover its reported profits, potentially implying reliance on non-cash earnings or external financing. Over the last 20 years, Sixt has shown considerable fluctuations in operating cash flow, rarely aligning closely with net income, raising questions about the consistency and quality of its earnings. Therefore, this criterion scores 0 points for 2023.

Liquidity of Sixt (SIX2.DE)

Leverage is declining?

Piotroski uses leverage as a measure of financial risk. Lower leverage suggests a company is less reliant on debt, which lowers financial risk.

Historical leverage of Sixt (SIX2.DE)

In 2022, Sixt had a leverage ratio of 0.2931, but in 2023, it increased to 0.3255. This represents an escalating reliance on debt. Historically, leverage has fluctuated, peaking at 0.439 in 2018 and sitting at a low in 2015. Thus, Sixt's increased leverage in 2023 marks a departure from the decreasing trend seen between 2020 and 2022. This is unfavorable, earning 0 points in this Piotroski criterion, reflecting heightened financial risk due to higher debt levels.

Current Ratio is growing?

The current ratio, calculated by dividing a company's current assets by its current liabilities, is a key liquidity measure. It assesses a company's ability to cover its short-term obligations with its short-term assets. A higher ratio indicates better liquidity and financial health.

Historical Current Ratio of Sixt (SIX2.DE)

The current ratio for Sixt has decreased from 2.5798 in 2022 to 2.4541 in 2023. While maintaining a current ratio above 2 remains quite solid, the decline suggests a minor weakening in the company's liquidity position. Despite this, Sixt continues to perform significantly better than the industry median current ratio, which stands at 1.3623 in 2023. Over a 20-year period, Sixt has demonstrated robust liquidity compared to the industry median, reflecting a well-managed short-term financial strategy. Thus, the trend does not meet the Piotroski criterion for improvement, and we set it to 0.

Number of shares not diluted?

This criterion examines the change in the number of shares outstanding to gauge if a company is engaging in share buybacks or issuing new shares, impacting overall shareholder value.

Historical outstanding shares of Sixt (SIX2.DE)

For Sixt (SIX2.DE), the number of outstanding shares remained the same, 30,367,112, in both 2022 and 2023. This implies that there was no increase in the outstanding shares during this period. In the context of Piotroski analyses, no decrease in shares implies no additional shareholder value through share buybacks, so the score remains 0. Observing the last 20 years, significant buybacks occurred post-2018, indicating a trend towards reducing the number of shares. Therefore, while the latest data does not positively impact the Piotroski score, Sixt has shown prudence in managing its shareholders' equity dilution.

Operating of Sixt (SIX2.DE)

Cross Margin is growing?

The change in Gross Margin criterion indicates whether a company is improving its efficiency in converting revenue into actual profit. A higher gross margin suggests improved profitability and operational efficiency, critical for evaluating a company's financial health and operational performance.

Historical gross margin of Sixt (SIX2.DE)

Comparing the Gross Margin of 0.7855 in 2023 with 0.8013 in 2022, it is evident that Sixt's Gross Margin has decreased. This is a negative trend according to the Piotroski score, which indicates a decrease in operational efficiency or added costs affecting profitability. Therefore, Sixt does not earn a point for this criterion. Historically, Sixt's Gross Margin showed an upward trend not only outpacing its 2017 value of 0.656 but also consistently performing better than the industry median. However, the dip in 2023 hints at potential operational or market challenges. The firm must investigate and address underlying issues to revert this trend and continue to support its financial resilience.

Asset Turnover Ratio is growing?

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

Historical asset turnover ratio of Sixt (SIX2.DE)

Sixt AG's asset turnover in 2023 is 0.6034 compared to 0.6088 in 2022, indicating a slight decrease. Over the past 20 years, the asset turnover ratio showed variability with highs and lows. Although the current ratio indicates efficiency, the slight decline from 2022 does not meet the criteria for assigning 1 point.


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