Last update on 2024-06-07

Simon Property Group (SPG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Piotroski F-Score analysis for Simon Property Group (SPG) in 2023 shows strong financials, earning 8/9 with positive net income, cash flow, and efficiency.

Short Analysis - Piotroski Score: 8

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

The Piotroski F-Score is a number from 0 to 9 measuring a company's financial strength. Simon Property Group (SPG) scores an impressive 8 out of 9. SPG has demonstrated strong profitability with positive net income and increasing return on assets. They also boast a high operating cash flow, which outweighs net income. Liquidity is improving with a growing current ratio but leverage has slightly increased. Their shares have decreased, and their gross margin and asset turnover are growing, signifying good operational efficiency.

Insights for Value Investors Seeking Stable Income

Given its high Piotroski F-Score of 8 and strong financial health indicators in areas such as profitability, cash flow, and operational efficiency, SPG appears to be a solid investment opportunity. Investors looking for a well-performing and potentially undervalued stock might consider adding Simon Property Group to their portfolio, especially noting their strong resilience and positive trends over the long term.

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

Profitability of Simon Property Group (SPG)

Company has a positive net income?

Net income analysis assesses profitability, critical for evaluating operational efficiency and financial health.

Simon Property Group (SPG) posted a net income of $2,283,126,000 in 2023, which is positive. Notably, SPG has consistently reported positive net income over the past 20 years, with variations in magnitude. The net income trend shows a significant resilience and an ability to maintain profitability even during challenging periods like 2009 and 2020 recessions. Hence, for 2023, SPG earns 1 point for having a positive net income, indicating a strong financial performance.

Company has a positive cash flow?

CFO indicates a company's short-term health and profitability. Positive CFO means a firm has more operating cash flowing in than out, ensuring sustainability.

Simon Property Group (SPG) reports a positive CFO of $3,930,793,000 in 2023, securing 1 Piotroski point. This consistent positive trajectory, especially when analyzing the last 20 years, shows persistent strong operational efficiency and effective cash flow management. Specifically, SPG's operating cash flow has grown from $951,967,000 in 2003 to $3,930,793,000 in 2023—an approximate fourfold increase. This validates robust operational execution and better resilience against economic cycles, reflecting well on SPG’s capability to generate cash from its core operations which is paramount for long-term financial health and flexibility.

Return on Assets (ROA) are growing?

Change in ROA means comparing the current year's Return on Assets with the previous year’s. It's a measure of improved profitability.

In 2023, Simon Property Group (SPG) reported an ROA of 0.0679, an increase from the 2022 ROA of 0.0641. This positive change suggests improved asset efficiency and profitability for SPG, contributing positively to the Piotroski score by 1 point. Moreover, a long-term review of the last 20 years shows consistent ROA growth. Although SPG’s ROA trails the industry median substantially, the improvement trend remains promising for investors. Therefore, this criterion can be interpreted as good.

Operating Cashflow are higher than Netincome?

This criterion assesses the relationship between a company's operating cash flow and its net income. Positive cash flow is crucial for maintaining liquidity.

In 2023, Simon Property Group reported an operating cash flow of $3,930,793,000, significantly higher than its net income of $2,283,126,000. This discrepancy implies robust cash generation from core operations, which is positive for liquidity. Historical data shows a consistent trend of operating cash flow surpassing net income, emphasizing sound operational efficiency. Hence, 1 point is added for this criterion.

Liquidity of Simon Property Group (SPG)

Leverage is declining?

Change in Leverage measures the degree to which a company's debt levels fluctuate. It is important because high leverage can indicate higher financial risk.

For Simon Property Group (SPG), the leverage ratio has increased slightly from 0.7712 in 2022 to 0.7735 in 2023. Consequently, we set the Piotroski score for this criterion to 0. Analyzing the leverage over the last 20 years, we note that the current level of 0.7735 is significantly higher than earlier years, such as 2003's leverage of 0.5601. This indicates an increasing trend in leverage, implying rising financial risk, which could be concerning to investors.

Current Ratio is growing?

The current ratio measures a company's ability to cover its short-term obligations with its short-term assets. A higher current ratio suggests better liquidity and financial health.

In 2023, Simon Property Group (SPG)'s current ratio stands at 1.0383, an improvement from 0.66 in 2022. This increase in the current ratio is a positive trend, indicating that the company is in a better position to cover its short-term liabilities, thus earning 1 point in this criterion. Comparatively, the industry's median current ratio in 2023 is 1.1846, which is slightly higher than SPG's ratio. However, SPG's progress shows an encouraging recovery from its lower ratios in previous years, aligning it more closely with industry standards.

Number of shares not diluted?

Change in shares outstanding is vital as it affects earnings per share calculations and shareholder ownership dilution. A decrease signals share buybacks or consolidation.

The Outstanding Shares in 2023 were 326,807,326 compared to 327,817,000 in 2022. This represents a decrease, thus adding 1 point. Long-term data shows most years saw an increase; however, this recent reduction is positive, indicating potential share buybacks or strategic measures to enhance shareholder value.

Operating of Simon Property Group (SPG)

Cross Margin is growing?

Examine the change in the Gross Margin between years. A rise might indicate better cost management or higher revenues relative to cost of goods sold. This is crucial for real estate investment trusts (REITs) as it affects profitability and investor return.

The Gross Margin of Simon Property Group (SPG) has increased from 0.8108 in 2022 to 0.8183 in 2023. Therefore, according to the Piotroski F-Score criteria, SPG earns 1 point for this improvement. Historically, SPG has performed better than the industry median Gross Margin over the majority of the evaluated years. The uptrend from 2022 to 2023 indicates a positive movement in profitability and effective cost management, reinforcing SPG's efficacy in maintaining superior operating efficiency. Intriguingly, this pattern is consistent with the overall trend seen over the past two decades, whereby SPG typically outperforms the industry norm.

Asset Turnover Ratio is growing?

The Change in Asset Turnover criterion assesses whether the company's efficiency in using its assets to generate sales has improved.

The Asset Turnover for Simon Property Group (SPG) has increased from 0.1585 in 2022 to 0.1682 in 2023. This indicates a positive trend where SPG is using its assets more efficiently to generate revenue. The trend is especially notable when we consider historical data: despite variations, the current Asset Turnover ratio shows improvement, particularly recovering from the dips seen around 2020. This increase awards SPG 1 point for this criterion, highlighting improved operational efficiency.