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Last update on 2024-06-06

Seagate Technology Holdings (STX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Analyze Seagate Technology's 2023 financials using Piotroski F-Score. Learn STX market insights from a 3/9 score on profitability, liquidity, 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: 3

We're running Seagate Technology Holdings (STX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
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?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score is a popular model used by investors to gauge the financial strength of a company based on 9 key criteria, primarily focusing on profitability, liquidity, and operational efficiency. Seagate Technology Holdings (ticker: STX) is analyzed using this methodology, receiving an overall Piotroski F-Score of 3 out of 9. Various metrics were considered, such as net income, cash flow, ROA, leverage, and gross margin. STX displayed mixed performance in profitability and liquidity but struggled significantly in operational efficiency measures like return on assets and gross margin.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 3, Seagate Technology Holdings shows some concerning signs regarding its financial health and operational efficiency. As an investor, you might want to exercise caution before investing in STX. However, it could be worth keeping an eye on for potential improvement, especially if the company can address its profitability and efficiency challenges. Overall, this stock might be more suitable for those with a higher risk tolerance or for those willing to delve deeper into other qualitative factors that may not be captured by this score.

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

Profitability of Seagate Technology Holdings (STX)

Company has a positive net income?

The net income criterion assesses whether a company has generated positive net income in the most recent fiscal year.

Historical Net Income of Seagate Technology Holdings (STX)

Based on the provided data, Seagate Technology Holdings (STX) reported a net income of -$529 million in 2023, which is negative. In the context of the Piotroski analysis, this reflects poorly on the firm's financial health and profitability. Historically, the company showed positive net income from at least 2018 to 2022, peaking at approximately $1.64 billion in 2021. Their negative net income for 2023 represents a significant downturn and contributes zero points to the Piotroski F-Score.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash generated by a company's regular business operations after deducting operating expenses.

Historical Operating Cash Flow of Seagate Technology Holdings (STX)

For Seagate Technology Holdings (STX), the CFO for 2023 is $942 million, which is positive. This is a good indicator and adds 1 point to the Piotroski score. Analyzing the historical data, the company has consistently had positive cash flow from operations with fluctuations reflecting operational performance and market conditions. Notably, CFO reached its peak in 2012 with $3.262 billion. Therefore, the trend of maintaining positive cash flow over the years is commendable.

Return on Assets (ROA) are growing?

Return on Assets (ROA) is a financial ratio that indicates the profitability of a company relative to its total assets. A higher ROA means more efficient management in utilizing assets to generate earnings.

Historical change in Return on Assets (ROA) of Seagate Technology Holdings (STX)

When comparing the ROA of Seagate Technology Holdings (STX), it becomes evident that the company has experienced a substantial decline from 0.1872 in 2022 to -0.0641 in 2023. This drop is a strong indicator of declining profitability and asset efficiency. For the last 20 years, the industry's median ROA has typically fluctuated between 0.3148 and 0.458, vastly outperforming Seagate's latest figures. In 2023, this significant decrease in ROA signals potential operational inefficiencies and challenges in generating earnings. Therefore, in the context of Piotroski Analysis, which aims for an increasing ROA, Seagate earns 0 points for this criterion.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) higher than Net Income: This criterion aims to identify whether a company generates sufficient cash from its operations to cover its net income. It's a measure of quality earnings.

Historical accruals of Seagate Technology Holdings (STX)

In 2023, Seagate Technology Holdings (STX) reported an Operating Cash Flow (OCF) of $942 million compared to a Net Income of -$529 million. This indicates that while the firm recorded a net loss, it still generated positive cash flow from its operations. This is a positive sign for the OCF to Net Income criterion, as it suggests that the firm's core operations are still generating cash despite overall accounting losses. Historically, Seagate's OCF has consistently been positive over the past two decades, barring a few missing entries, underscoring its robust cash-generating ability. On the other hand, net income entries for some years were also missing or zero, making it challenging to draw consistent comparisons year over year. However, the current trend of OCF being higher than Net Income is favorable. Therefore, Seagate earns 1 point for this criterion in 2023, emphasizing strong cash flow fundamentals.

Liquidity of Seagate Technology Holdings (STX)

Leverage is declining?

Leverage measures the amount of debt a company uses to finance its assets, which affects solvency.

Historical leverage of Seagate Technology Holdings (STX)

In 2022, Seagate's leverage was 0.57, but it increased to 0.7571 in 2023. This increase signals higher debt levels, raising concerns about financial risk. Since leverage increased, this criterion scores 0 points. Historically, leverage has fluctuated, peaking in recent years, indicating growing reliance on debt financing.

Current Ratio is growing?

Current Ratio represents a company's liquidity by measuring its ability to cover short-term obligations with its current assets. It is a crucial metric for assessing a firm's financial health.

Historical Current Ratio of Seagate Technology Holdings (STX)

The Current Ratio for Seagate Technology Holdings (STX) has slightly declined from 1.1345 in 2022 to 1.1208 in 2023. This signifies a marginal decrease in liquidity, indicating the company's slightly diminished capacity to cover short-term liabilities compared to the previous year. Historically, STX’s Current Ratio over the last 20 years peaked at 2.4091 and has generally declined, trailing below the industry median of 2.3065 in 2023. Hence, no point is added for this criterion as better liquidity in the Current Ratio is observed in an increase.

Number of shares not diluted?

Change in Shares Outstanding indicates if the company is issuing more shares to gather capital or buying back shares to consolidate ownership.

Historical outstanding shares of Seagate Technology Holdings (STX)

In 2023, Seagate Technology Holdings (STX) had 207,000,000 outstanding shares compared to 220,000,000 in 2022. This represents a decrease in outstanding shares, a positive sign under Piotroski criteria, granting one point to the financial score. Over 20 years of data, outstanding shares fluctuated significantly, showing both periods of reduction and issuance. Decreasing shares outstanding often signals management confidence and returning value to shareholders.

Operating of Seagate Technology Holdings (STX)

Cross Margin is growing?

Gross Margin measures a company's financial health and business model efficiency by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. An improving Gross Margin usually indicates better-managed production costs and stronger pricing power.

Historical gross margin of Seagate Technology Holdings (STX)

Seagate Technology Holdings (STX) saw a significant decrease in Gross Margin from 0.2975 in 2022 to 0.183 in 2023. This represents a considerable decline of approximately 38.5%. Given that a higher Gross Margin is generally favorable as it implies stronger earnings relative to sales, this trend is adverse. When assessing the historical trend, Seagate's Gross Margin has oscillated but stayed relatively close to the industry median until the recent drop. The current figure is markedly below the industry median of 0.3501 in 2023, exacerbating concerns about operational inefficiencies or increased cost pressures within the company. Therefore, Seagate does not earn a point for this criterion, resulting in a score of 0.

Asset Turnover Ratio is growing?

The change in Asset Turnover evaluates if the company utilizes its assets more efficiently to generate revenues year over year, which is crucial for operational efficiency.

Historical asset turnover ratio of Seagate Technology Holdings (STX)

When examining Seagate Technology Holdings' Asset Turnover, it is evident that it has decreased from 1.3237 in 2022 to 0.895 in 2023. This marks a decline rather than an increase, warranting a score of 0 for this Piotroski criteria. A descending trend suggests the company has become less efficient at using its assets to generate revenue. Historically, over the last two decades, Seagate's Asset Turnover has oscillated, with notable peaks and troughs. The latest drop might indicate potential operational challenges or inefficiencies fashioned by recent market conditions.


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