SSNC 65.31 (+3.88%)
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Last update on 2024-06-07

SS&C Technologies Holdings (SSNC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

SS&C Technologies Holdings (SSNC) scored 7/9 in the Piotroski F-Score for 2023. Learn about its financial health and profitability.

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: 7

We're running SS&C Technologies Holdings (SSNC) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a method to measure a company's financial position on a scale of 0 to 9 using 9 criteria in profitability, liquidity, and operating efficiency. SS&C Technologies Holdings (SSNC) has a Piotroski score of 7. Key points include a positive net income and cash flow from operations, a decrease in Return on Assets (ROA) indicating lower asset efficiency, a high operating cash flow compared to net income, a decrease in leverage (positive), a slight drop in the current ratio showing a small decrease in liquidity, a decrease in outstanding shares indicating fewer shareholder dilutions, a small increase in gross margin showing improved cost management, and a slight increase in asset turnover reflecting better asset utilization.

Insights for Value Investors Seeking Stable Income

SS&C Technologies Holdings (SSNC) scores 7 out of 9 on the Piotroski F-Score, suggesting it is generally a strong company financially. It has demonstrated robust profitability potential, effective cash flow management, and decreasing leverage, all of which are positive indicators. However, there is room for improvement in efficiency metrics such as ROA, liquidity (current ratio), and operating efficiency (gross margin and asset turnover). As an investor, it might be worth considering SSNC for investment but keeping a close eye on the areas needing improvement for sustained growth.

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

Profitability of SS&C Technologies Holdings (SSNC)

Company has a positive net income?

Net income indicates a company's profitability and is crucial for assessing its financial health.

Historical Net Income of SS&C Technologies Holdings (SSNC)

For SS&C Technologies Holdings (SSNC), the net income for 2023 stands at $607.1 million, which is positive. Evaluating the historical data, we can observe a significant upward trend over the last twenty years, reaching peaks in recent years with figures like $625.2 million in 2020 and $800 million in 2021. This positive net income signifies robust profitability and adds 1 point.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash a company generates from its regular operating activities. It must be positive to ensure operational viability.

Historical Operating Cash Flow of SS&C Technologies Holdings (SSNC)

For SS&C Technologies Holdings (SSNC), the CFO in 2023 is $1,215,100,000, which is positive. This adds 1 point to the Piotroski score. Historically, SSNC's CFO has been positive and strong, with a general upward trend over 20 years. This indicates a robust operational performance and effective management, reaffirming investors' confidence.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is evaluated by comparing the current year’s ROA with the prior year’s. It is an important measure of management efficiency, assessing the company's ability to generate profits from its assets.

Historical change in Return on Assets (ROA) of SS&C Technologies Holdings (SSNC)

In 2023, SS&C Technologies Holdings (SSNC) experienced a decrease in ROA to 0.0349 from 0.0383 in 2022. This indicates a slight decline in asset efficiency. While the drop is marginal, it reflects a need to investigate underlying causes. Given that SSNC's ROA is significantly lower than the industry's median ROA, which stands at 0.6741 for 2023, this trend is particularly concerning. Therefore, the score for this criterion should be set to 0, signaling a decrease in performance.

Operating Cashflow are higher than Netincome?

A company's operating cash flow (OCF) being higher than its net income is a positive indicator of its financial health. OCF indicates the cash generated by a company’s core business activities and should ideally cover its net income. This criterion helps in identifying companies that have strong cash-generating capabilities, which is crucial for meeting obligations and reinvesting in the business.

Historical accruals of SS&C Technologies Holdings (SSNC)

For SS&C Technologies Holdings (SSNC), the operating cash flow for 2023 is $1,215,100,000, which is significantly higher than its net income of $607,100,000 for the same period. This yields a favorable outcome and one Piotroski point is awarded. This trend suggests a strong cash-generating ability from SS&C's core business operations. Historically, the company's operating cash flow has generally been rising, especially post-2015 when it escalated from $470,362,000 to over a billion dollars. Such a trend is positive as it indicates a sustainable financial model. Furthermore, this data signals a level of prudence in financial reporting and healthy accruals management, which stands at 0.0671 in 2023.

Liquidity of SS&C Technologies Holdings (SSNC)

Leverage is declining?

Changes in a company's leverage, measured by its debt-to-equity ratio, are crucial as they indicate the firm's ability to meet its long-term obligations. Lower leverage is generally preferred as it suggests reduced financial risk.

Historical leverage of SS&C Technologies Holdings (SSNC)

Examining SS&C Technologies Holdings' leverage, we observe an increase from 0.436 in 2022 to 0.3794 in 2023. This outcome signifies a decrease in leverage, which is favorable and results in adding 1 point to this criterion. Historically, SSNC has maintained variable leverage levels evidencing management’s commitment to optimizing debt. For example, leverage was at 0.2706 in 2014, shot up to 0.5071 in 2018, and has now stabilized to 0.3794 in 2023. The reduction in leverage in 2023, relative to 2022, reflects effective debt management and reduced financial risk, reinforcing the company’s fiscal prudence.

Current Ratio is growing?

Current Ratio measures the ability of a company to pay short-term obligations with its short-term assets.

Historical Current Ratio of SS&C Technologies Holdings (SSNC)

In 2022, SS&C Technologies Holdings (SSNC) had a Current Ratio of 1.1066, which decreased slightly to 1.0741 in 2023. Thus, the Current Ratio has decreased year-over-year, indicating a marginal reduction in the company's liquidity. Compared to the industry median of 1.6815 in 2022 and 1.7519 in 2023, SSNC's Current Ratio is significantly lower, suggesting that it has less capacity to meet short-term liabilities compared to its industry peers. Given the industry median trends, SSNC must tread cautiously to ensure it doesn't fall into liquidity traps. Consequently, for the Piotroski Analysis, this criterion scores 0.

Number of shares not diluted?

Change in Shares Outstanding evaluates whether a company is diluting shareholder value. A decrease is favorable.

Historical outstanding shares of SS&C Technologies Holdings (SSNC)

In 2023, SS&C Technologies Holdings saw a decrease in outstanding shares to 248,300,000 from 254,000,000 in 2022. This reduction signifies a positive trend which is indicative of share buybacks, suggesting management's confidence in the company's future performance. Therefore, SSNC gains 1 point for this criterion.

Operating of SS&C Technologies Holdings (SSNC)

Cross Margin is growing?

Change in Gross Margin assesses the efficiency in cost management and the ability to generate revenue relative to the cost of goods sold.

Historical gross margin of SS&C Technologies Holdings (SSNC)

In 2023, SS&C Technologies Holdings (SSNC) reported a Gross Margin of 0.4819, compared to 0.4761 in 2022. This indicates an increase of 0.006, which can be considered a positive trend for the company. Achieving greater Gross Margins often correlates with improved cost control or an ability to command higher prices, both beneficial for the company's profitability. For context, over the past 20 years, SSNC’s Gross Margin has fluctuated, dipping as low as 0.4005 in 2018 and peaking at 0.7206 in 2003. While this year’s margin is below the historical peak, it shows a resilient upward trend and has surpassed the 20-year industry median Gross Margin of 0.6741. Consequently, SSNC earns 1 point for this criterion due to the Gross Margin improvement from 2022 to 2023.

Asset Turnover Ratio is growing?

Change in Asset Turnover compares the efficiency in utilizing assets to generate revenue from one year to the next, indicating operational efficiency.

Historical asset turnover ratio of SS&C Technologies Holdings (SSNC)

Analyzing the data, SS&C Technologies Holdings (SSNC) shows a slight increase in asset turnover from 0.3109 in 2022 to 0.3167 in 2023. This upward trend of 0.0058 points indicates improved efficiency in using its assets to generate revenue. While this increase might seem marginal, it is essential to recognize that any positive shift can indirectly enhance profitability. Over the last 20 years, SS&C's asset turnover has generally fluctuated but has remained around similar levels in recent years. This increase should be considered good for the given criteria, awarding SSNC 1 point.


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