Last update on 2024-06-07

Surmodics (SRDX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Explore Surmodics (SRDX) stock analysis using the Piotroski F-Score for 2023, with a final score of 6/9. Learn about profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 6

We're running Surmodics (SRDX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a score between 0 and 9 that shows how strong a company's financial situation is. Surmodics (SRDX) has a Piotroski score of 6 out of 9, which means its financial status is okay, but there's room for improvement. They did well in criteria like positive cash flow, increasing ROA, better gross margins, a higher current ratio, positive operating cash flow over net income, and improved asset turnover. However, they need to work on having positive net income, decreasing their leverage, and not diluting shares. These areas show where the company might be struggling and where they can improve.

Insights for Value Investors Seeking Stable Income

Surmodics (SRDX) has some strengths but also notable weaknesses. If you're considering investing, it's not a bad choice, but there are risks. The company shows good liquidity, operational efficiency, and cash flow, but increased leverage, negative net income, and shareholder dilution are concerns. It could be a good idea to monitor the company for improvements in these areas before making a final decision.

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

Profitability of Surmodics (SRDX)

Company has a positive net income?

Net income measures a company's profitability after all expenses and taxes have been deducted from revenue. It is crucial for evaluating financial health.

The net income for Surmodics (SRDX) in 2023 is -$1,536,000, which is negative. Thus, this criterion scores 0 points. Analyzing the net income trend over the last 20 years, there were fluctuations, with notable losses in 2022 (-$27,274,000) and significant profits in certain years such as 2009 ($37,550,000). The negative net income in 2023 indicates a downturn year for the company, suggesting difficulties in managing profitability and control over expenses.

Company has a positive cash flow?

Check if CFO 10514000 in 2023 are postive or negativ. If the CFO is postive add 1 point if not set it to 0.

For 2023, Surmodics (SRDX) has reported a Cash Flow from Operations (CFO) of $10,514,000, which is positive. This earns the company 1 point under the Piotroski F-Score for this criterion. Evaluating the trend over the last 20 years, CFO has been mostly positive, except for a significant dip in 2022 with a negative CFO of -$17,223,000. Consequently, the return to a positive CFO in 2023 is a positive trend, suggesting improved operational efficiency and financial health for the company

Return on Assets (ROA) are growing?

Change in ROA assesses the company's profitability relative to its total assets compared to the previous year.

In 2023, Surmodics (SRDX) had an ROA of -0.0089, a significant improvement from -0.1545 in 2022. This means that even though the company is still generating negative returns on its assets, the losses are much smaller than in the previous year. Given that an improved ROA reflects more effective management and better utilization of assets, despite being negative, this is a positive trend. Additionally, comparing to the last 20 years of historical data and the industry median ROA, which hovers between 0.5456 to 0.6463, Surmodics still underperforms its industry, indicating significant room for improvement.

Operating Cashflow are higher than Netincome?

Explain the criterion for Surmodics (SRDX) and why it is important to consider

Operating cash flow (OCF) higher than net income indicates high-quality earnings. OCF represents real money coming in, while net income can include non-cash items like depreciation and amortization. For Surmodics (SRDX), OCF is $10.51M and net income is -$1.54M in 2023, suggesting real cash influx despite accounting losses. Historical data: 2023 OCF: $10.51M, 2023 net income: -$1.54M, adds 1 Piotroski point.

Liquidity of Surmodics (SRDX)

Leverage is declining?

Change in Leverage measures the variation of the company's debt usage from one year to the next and is crucial for assessing financial risk.

The Leverage for Surmodics (SRDX) has increased from 0.0243 in 2022 to 0.1743 in 2023. This percentage suggests a higher dependency on debt financing compared to equity financing, indicating increased financial risk. Historically, the company's leverage was minimal, seldom exceeding 0.02 in the past two decades. However, the 2023 leverage figure marks a significant shift, indicating potentially over-leveraging and heightened exposure to financial risk, rendering this trend unfavorable for Piotroski's criterion, resulting in a score of 0 for this factor.

Current Ratio is growing?

Current Ratio measures a company's ability to cover its short-term obligations with its short-term assets. It's crucial for assessing liquidity and financial health.

Surmodics (SRDX) exhibited an increase in its Current Ratio from 1.7952 in 2022 to 3.6191 in 2023. This significant increase is noteworthy as it indicates a substantial improvement in the company's liquidity position. Comparing this to the industry's median Current Ratio of 4.0615 in 2023, Surmodics is slightly below the industry median, but the upward trend is significant. Historically, the company's Current Ratio has seen fluctuations, with a peak of 14.4232 in 2015. This increase from 2022 to 2023 adds 1 point in Piotroski F-Score, reflecting positively on the company’s capability to manage short-term liabilities.

Number of shares not diluted?

The Change in Shares Outstanding criterion looks at whether the number of shares outstanding decreased or remained constant over the analyzed period.

For Surmodics (SRDX), the Outstanding Shares increased from 13,916,000 in 2022 to 14,031,000 in 2023. Thus, no point is awarded here. This upward trend suggests potential equity or dilution which might not be favorable for existing shareholders, as it could dilute the value of each share unless the capital raised from issuing these new shares was deployed effectively to generate proportional increments in earnings.

Operating of Surmodics (SRDX)

Cross Margin is growing?

The Change in Gross Margin criterion measures the percentage difference between gross margins over two years.

Surmodics (SRDX) demonstrated a notable increase in its gross margin from 0.2901 in 2022 to 0.4603 in 2023, which translates to an increase of 0.1702 or 17.02 percentage points. This is an encouraging sign, as an increasing gross margin indicates better cost management and higher efficiency in producing goods or services. The gross margin improvement suggests the company has enhanced its pricing strategy or reduced the cost of goods sold—or potentially both. Over the past 20 years, SRDX’s gross margins have seen significant fluctuations, peaking as high as 0.9542 and dropping to lows like 0.2901 in 2022. Comparing to the industry's median gross margin of 0.6463 in 2023, Surmodics still operates under the industry median. Nonetheless, this year’s improvement is an important positive step. As a result, for the Piotroski F-Score calculation, Surmodics earns 1 point for this criterion.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures the revenue generated for every dollar's worth of assets. A higher ratio indicates increased efficiency.

In 2023, Surmodics recorded an asset turnover ratio of 0.7706 compared to 0.5664 in 2022. This represents a marked increase, earning the company one additional point according to the Piotroski score criterion. The ratio showcases Surmodics' enhanced ability to generate revenue from its assets, reflecting heightened operational efficiency and better asset utilization. Historically, analyzing the last 20 years of data reveals that the company's asset turnover ratio fluctuated, reaching its peak in 2023, far exceeding the ratios recorded in previous years. This positive trend suggests a substantive improvement in asset management practices.