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Last update on 2024-06-06

S&P Global (SPGI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

S&P Global's Piotroski F-Score for 2023 is 4/9, analyzing the company's financial health and 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: 4

We're running S&P Global (SPGI) 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?
0
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is an evaluation method to assess a company's financial health based on 9 criteria. We analyzed S&P Global (SPGI) using this model, and it scored 4 out of 9, indicating mixed financial health. Here's the breakdown of the criteria: 1. Profitability: The company has positive net income and cash flow, but the Return on Assets (ROA) has decreased. 2. Cash Flow vs. Net Income: Operating cash flow is higher than net income, which is a positive sign. 3. Liquidity: The leverage ratio has increased and the current ratio has decreased, showing some risk. 4. Shares: The number of shares has increased, indicating potential dilution. 5. Operational Efficiency: The Gross Margin has improved, but the Asset Turnover Ratio has fallen.

Insights for Value Investors Seeking Stable Income

Based on this analysis, S&P Global (SPGI) presents a mixed picture. While it shows strengths in profitability and operational efficiency, it also faces challenges with leverage, liquidity, and some operational efficiency metrics like Asset Turnover. For potential investors, this mixed score suggests it may be worth exploring S&P Global further but also comparing it with other stocks that have a higher Piotroski score for potentially more stable investments.

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

Profitability of S&P Global (SPGI)

Company has a positive net income?

A positive net income indicates that a company is profitable and generating more revenue than expenses, contributing to shareholder value.

Historical Net Income of S&P Global (SPGI)

S&P Global's net income for 2023 is $2.626 billion, which is positive, indicating profitability. Over the last 20 years, the company has had positive net income 19 times, with only one year of negative net income in 2013. This trend demonstrates strong financial health and consistent performance, making the recent positive net income a good indicator for investors. Therefore, the criterion receives 1 point.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates a company's total cash flow before capital investments. Assessing CFO is crucial as it measures a firm's ability to generate cash from its core operations, ensuring sustainability and growth.

Historical Operating Cash Flow of S&P Global (SPGI)

In 2023, S&P Global (SPGI) reported a Cash Flow from Operations (CFO) of $3.71 billion. Given that this value is positive, SPGI earns a point based on this criterion. Reviewing the trend of the past 20 years showcases a significant and consistent growth in CFO. From just above $1 billion in 2003, the figure has multiplied several folds, spotlighting SPGI's robust operational performance. Particularly impressive is the leap from $747 million in 2012 to over $3 billion post-2019. This consistent and substantial increase in operating cash flow underpins the company's financial health and ability to reinvest in business operations, make strategic acquisitions, and return value to shareholders through dividends and share buybacks. This upward trend in CFO is unquestionably favorable for SPGI.

Return on Assets (ROA) are growing?

Return on Assets (ROA) compares net income to total assets, indicating how effectively a company is using its assets to generate profit. A higher ROA shows greater efficiency.

Historical change in Return on Assets (ROA) of S&P Global (SPGI)

For S&P Global (SPGI), the Return on Assets (ROA) decreased from 0.0855 in 2022 to 0.0429 in 2023. Consequently, this criterion scores 0 points as the ROA did not increase in 2023, falling to almost half its previous year’s value. This indicates a reduced efficiency in asset utilization for generating profits, which is a negative trend for the company. Historically, SPGI’s ROA fluctuates, with notable highs and lows over the past two decades. When comparing SPGI's 2023 ROA of 0.0429 to the industry's median ROA of 0.6043, it is evident that SPGI significantly underperformed relative to its peers. This trend calls for introspection and re-evaluation of asset management strategies by SPGI.

Operating Cashflow are higher than Netincome?

This criterion compares the operating cash flow with net income.

Historical accruals of S&P Global (SPGI)

For the year 2023, S&P Global (SPGI) has an Operating Cash Flow of $3,710,000,000 and Net Income of $2,626,000,000, resulting in a significantly higher operating cash flow. According to Piotroski's criteria, this situation is positive, as it demonstrates strong cash generation relative to net income. Over the past 20 years, S&P Global consistently showed varying operating cash flows; notable spikes include $2,776,000,000 in 2019 and $3,710,000,000 in 2023. The evaluations indicate robust health and business efficiency, especially with the current year on an upward trend, earning 1 point.

Liquidity of S&P Global (SPGI)

Leverage is declining?

Leverage measures the extent to which a company is funding its operations through debt and is important to assess the company's financial stability and risk.

Historical leverage of S&P Global (SPGI)

The leverage ratio for S&P Global increased from 0.183 in 2022 to 0.1973 in 2023. This implies that S&P Global has taken on more debt relative to its equity in 2023 compared to 2022. Historically, leverage ratios over the last 20 years have shown considerable variability, peaking at 0.4238 in 2015 and showing lows near 0.0001 in the early 2000s. The current increase is relatively marginal but moves away from the lower, more conservative leverage levels seen between 2016-2021. Given this trend, we set the leverage score to 0.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover short-term liabilities with short-term assets. A ratio below 1 suggests liquidity issues.

Historical Current Ratio of S&P Global (SPGI)

In 2023, S&P Global's Current Ratio decreased to 0.8397 from 0.9447 in 2022, marking a decline. This trend is concerning as it suggests reduced ability to cover short-term liabilities with short-term assets, setting the point at 0.

Number of shares not diluted?

This criterion examines the change in the number of outstanding shares from one period to another. A decrease in the number of outstanding shares can be a positive sign as it may indicate share buybacks, which can enhance shareholder value by increasing the value of remaining shares.

Historical outstanding shares of S&P Global (SPGI)

For S&P Global (SPGI), the number of outstanding shares increased from 316.9 million in 2022 to 318.4 million in 2023. This increase of 1.5 million shares is a negative trend for this criterion, resulting in 0 points added. Reviewing the last 20 years, SPGI has generally decreased its shares outstanding, from over 384 million in 2003 to approximately 318 million in 2023. The recent uptick, however, does not align with the historical trend of reducing shares.

Operating of S&P Global (SPGI)

Cross Margin is growing?

The change in Gross Margin from one year to the next is an important measure of a company's operational efficiency and profitability. A rising Gross Margin indicates that the company is managing its cost of goods sold well relative to its revenues.

Historical gross margin of S&P Global (SPGI)

The Gross Margin for S&P Global (SPGI) increased from 0.6643 in 2022 to 0.6686 in 2023. This indicates a positive trend in the company’s operational efficiency and cost management. Compared to the industry median, which shows a decline to 0.6043 in 2023, S&P Global's higher Gross Margin portrays a robust performance. Over the last 20 years, S&P Global’s Gross Margin has mostly been on an uptrend, outperforming the industry median in most years. Thus, a score of 1 point is justified for this criterion as the Gross Margin increased in 2023, signaling better profitability.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate sales. A higher ratio indicates better performance.

Historical asset turnover ratio of S&P Global (SPGI)

Comparing the Asset Turnover of S&P Global in 2022 (0.2944) with that in 2023 (0.2042), it is evident that the Asset Turnover has decreased. The ratio dropped from 0.2944 to 0.2042 (around 30.69% decrease). Examining the last 20 years of data, there is a consistent downward trend. This decrease suggests deteriorating efficiency in utilizing assets to generate revenue, which is a negative signal for investors.


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