T 18.85 (+1.45%)
US00206R1023Telecommunication ServicesTelecom Services

Last update on 2024-06-14

AT&T (T) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Piotroski F-Score analysis of AT&T (T) for 2023 with in-depth evaluation of financial metrics, profitability, liquidity and operating efficiency. Final score: 8/9.

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.
Learn more...

Short Analysis - Piotroski Score: 8

We're running AT&T (T) 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?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score of AT&T based on 2023 data is 8, out of a maximum of 9. This score is derived from analyzing profitability, liquidity, and operating efficiency through 9 criteria. AT&T meets most of these criteria, scoring points for having positive net income, positive cash flow from operations, growing ROA, operating cash flow higher than net income, growing current ratio, and a growing gross margin and asset turnover ratio. However, the company doesn't earn points for declining leverage and the number of shares outstanding, suggesting an increase in debt reliance and share dilution.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 8, AT&T seems to be a strong investment candidate. With solid profitability and improving efficiency metrics, the company shows resilience and growth potential. However, the increase in leverage and share dilution are minor concerns that need consideration. For a potential investor, AT&T warrants a closer look, bearing in mind both the positive trends and the areas needing improvement.

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

Profitability of AT&T (T)

Company has a positive net income?

Net income analysis for AT&T involves checking if the company is generating profits. A positive net income suggests that the company is financially healthy and adding value for its shareholders. Conversely, a negative net income would indicate financial issues.

Historical Net Income of AT&T (T)

AT&T’s net income for 2023 is $14,400,000,000, which is positive. This is favorable per Piotroski’s criterion, and thus it deserves a point. Analyzing historical data, AT&T has generally shown positive net income over the past 20 years, except in 2020 and 2022 when it recorded losses of $5,176,000,000 and $8,524,000,000, respectively. The positive net income in 2023 indicates a recovery from these years. The positive net income trend adds to the financial stability and resilience of AT&T despite the occasional dips.

Company has a positive cash flow?

Cash flow from operations (CFO) is a critical measure of a company's ability to generate cash through its regular business operations, indicating overall financial health.

Historical Operating Cash Flow of AT&T (T)

For 2023, AT&T's cash flow from operations (CFO) stood at $38.31 billion, marking a positive figure. Historically, AT&T has consistently maintained a robust CFO, as evidenced by its performance over the past two decades. With only slight fluctuations, such as a peak in 2019 with $48.67 billion and a dip in 2012 with $31.34 billion, the trend has generally been upward. This strong and steady generation of cash through core operations is essential for maintaining business health, funding capital expenditures, paying dividends, and reducing debt. Therefore, AT&T earns a full 1 point for this criterion in the Piotroski Analysis.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability relative to its total assets. It demonstrates how efficiently a company is using its assets to generate earnings. An increase in ROA indicates improved efficiency and profitability.

Historical change in Return on Assets (ROA) of AT&T (T)

AT&T's ROA improved significantly in 2023, rising to 0.0356 from -0.0179 in 2022. This sharp increase, roughly a 153% upturn, is promising, indicating that the company has turned around its asset productivity and profitability. While this is a positive trend for AT&T, its 2023 ROA still lags far behind the industry median ROA of 0.6122, showcasing that there is still substantial room for competitive improvement. Nevertheless, the uptick adds 1 point to AT&T's Piotroski score for 2023, signifying a positive development in its financial health.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is a criterion that indicates whether a company earns more from its core operations relative to its net earnings, which is significant since it suggests strong cash-generating ability and earnings quality.

Historical accruals of AT&T (T)

For AT&T (T) in 2023, the Operating Cash Flow stands at approximately $38.31 billion, while the Net Income is about $14.4 billion. This positive disparity implies robust operational efficiency and superior cash management. Given this criterion, AT&T secures a score of 1. Over the past 20 years, AT&T has generally demonstrated a strong operating cash flow, indicating a pattern of effective operations and financial health. The accruals trend also suggests a reasonable quality of earnings, as lower accruals indicate minimal impact from non-cash items.

Liquidity of AT&T (T)

Leverage is declining?

Change in Leverage compares the company's debt level from one year to the next. It's critical to evaluate this to determine whether a company is becoming more or less reliant on borrowed money.

Historical leverage of AT&T (T)

In 2023, AT&T's leverage ratio was 0.3572, a slight increase from 0.3651 in 2022. This indicates that the company’s leverage has indeed increased. Assessing the historical data, AT&T has shown a fluctuating but generally upward trend in its leverage over the past 20 years, peaking at 0.3651 in 2022 from a leverage of 0.3029 in 2014. A higher leverage ratio suggests an increase in debt relative to equity, which could raise concerns about the company’s reliance on debt financing and its ability to manage and service its debt obligations. Consequently, AT&T does not earn a point for this criterion.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities and measures its ability to cover short-term obligations. An increasing ratio indicates improving liquidity, while a decreasing ratio suggests potential liquidity issues.

Historical Current Ratio of AT&T (T)

For 2023, AT&T's Current Ratio is 0.7131 compared to 0.5894 in 2022. This represents an increase, highlighting an improving short-term liquidity position. The improved ratio suggests that AT&T is better able to cover its short-term liabilities with its current assets than it was the previous year. Despite this increase, when comparing this ratio to the industry median over the past twenty years, which stands at 0.9574 in 2023, it is evident that AT&T's liquidity remains below industry standards. Historically fluctuating ratios—ranging from a high of 1.6075 in 2021 to a low of 0.4511 in 2004—further underline the variability in AT&T's short-term financial health. Thus, while this year’s increase is a positive step, there is substantial room for improvement when benchmarked against industry peers.

Number of shares not diluted?

Change in shares outstanding indicates whether a company is issuing new shares or buying back existing ones. An increase in shares suggests dilution, which can weaken EPS.

Historical outstanding shares of AT&T (T)

AT&T's outstanding shares increased from 7,166,000,000 in 2022 to 7,181,000,000 in 2023. Hence, no point is awarded according to the Piotroski analysis. Historically, AT&T's shares have seen considerable fluctuations; the increase from 2022 suggests recent dilution, reversing the prior year's slight reduction.

Operating of AT&T (T)

Cross Margin is growing?

The criterion assesses whether AT&T's Gross Margin has improved year-over-year. An increase typically indicates a better control over production costs or higher pricing power, which can contribute positively to profitability.

Historical gross margin of AT&T (T)

From 2022 to 2023, AT&T's Gross Margin improved from 0.5789 to 0.5906. This increase suggests enhanced operational efficiency or cost control. AT&T's Gross Margin surpasses the industry median of 0.6122 (2023), illustrating robust performance in its sector. Overall, this positive trend adds 1 point to its Piotroski F-Score.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. A higher ratio indicates better performance in converting assets into revenue, and an increase is generally viewed positively.

Historical asset turnover ratio of AT&T (T)

In 2023, AT&T's Asset Turnover ratio was 0.3023, up from 0.253 in 2022. This marks an increase, thus AT&T earns one point in the Piotroski scorecard. Historically, we observe that AT&T had significantly higher Asset Turnover ratios in the mid-2000s, with figures exceeding 0.45 during 2008-2010. However, there has been a declining trend over the last decade, with the ratio dropping from 0.4681 in 2013 to as low as 0.2488 in 2021, before the recent increase. Despite the uplift in 2023, the ratio remains considerably below the levels seen in the early 2000s.


Obligatory risk notice

We would like to point out that the contents of this website are for general information purposes only and do not constitute recommendations for the purchase or sale of specific financial instruments, and therefore do not constitute investment advice. In particular, marketstorylabs.com and its creators cannot assess the extent to which information / recommendations made on the pages correspond to your investment objectives, your risk tolerance and your ability to bear losses. Therefore, if you make any investment decisions based on information on the site, you do so solely on your own responsibility and at your own risk. This in turn means that neither marketstorylabs.com nor its creators are liable for any losses incurred as a result of investment decisions based on the information on the marketstorylabs.com website or other media used.