TACT 3.92 (+0.51%)
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Last update on 2024-06-07

Transact Technologies (TACT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Analyze the 2023 Piotroski F-Score of Transact Technologies (TACT) with a perfect score of 9, highlighting profitability, liquidity, and operational 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: 9

We're running Transact Technologies (TACT) 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?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Transact Technologies (TACT) has achieved a perfect Piotroski F-Score of 9, indicating a strong financial position. This high score suggests that the company is currently in good financial health, displaying positive trends in profitability, liquidity, and operational efficiency. Key highlights include positive net income and cash flow from operations, growing ROA, improved current ratio, reduced leverage, higher operating cash flow than net income, growing gross margin, and increased asset turnover ratio.

Insights for Value Investors Seeking Stable Income

Given Transact Technologies' perfect Piotroski score and notable recovery in financial metrics, it appears to be a strong candidate for investment. The indicators suggest that TACT is currently undervalued and has demonstrated considerable improvement in various financial aspects. Investors looking for robust opportunities with potential for growth may consider TACT as a viable option. However, it's still essential to conduct thorough personal research or consult with a financial advisor to align this opportunity with your investment strategy and risk tolerance.

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

Profitability of Transact Technologies (TACT)

Company has a positive net income?

Net income indicates a company's overall profitability, crucial for investors assessing financial health and performance trends over time.

Historical Net Income of Transact Technologies (TACT)

Transact Technologies (TACT) reported a net income of $4,748,000 in 2023, which is positive and earns the company 1 Piotroski point for this criterion. Analyzing the historical data reveals a checkered financial past with both positive and negative figures. Notably, the company recorded significant losses in 2012, 2015, 2019, 2020, and 2021. However, despite these setbacks, 2023 saw a return to profitability, indicating a potential recovery or improvement in TACT's operations and financial strategy.

Company has a positive cash flow?

The first criterion is whether the company's Cash Flow from Operations (CFO) is positive. This is crucial because positive CFO suggests that the company is generating sufficient cash from its core business activities, which is a fundamental sign of financial health.

Historical Operating Cash Flow of Transact Technologies (TACT)

Transact Technologies (TACT) reported a CFO of $5,507,000 in 2023. This is a positive cash flow, which adds 1 point to the Piotroski score. Examining the historical data over the last 20 years, TACT has experienced fluctuations in its operational cash flow. For instance, there were three consecutive years (2019-2021) where the CFO was negative, the lowest being -$12,220,000 in 2021. The return to a positive CFO in 2023 is a notable improvement and suggests a potential turnaround or stabilization in operating efficiency. Hence, this trend is good as it indicates recovery and a positive sign for stakeholders who rely on stable cash flows for investment confidence.

Return on Assets (ROA) are growing?

Explain the criterion for Transact Technologies (TACT) and why it is important to consider

Historical change in Return on Assets (ROA) of Transact Technologies (TACT)

The Return on Assets (ROA) measures a company's ability to generate profit relative to its total assets. This ratio is crucial for assessing the efficiency of a company's asset usage in generating earnings. A higher ROA indicates more efficient use of assets.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is one of the criteria in the Piotroski F-Score analyses and assesses the quality of earnings.

Historical accruals of Transact Technologies (TACT)

For Transact Technologies (TACT) in 2023, the Operating Cash Flow (OCF) was $5,507,000 while the Net Income was $4,748,000. Since OCF is higher than Net Income, the company scores 1 point for this criterion. This is a positive sign as it indicates that the company is generating more cash from its operations than it is reporting in net profits, which can suggest earnings are not significantly based on non-cash items.

Liquidity of Transact Technologies (TACT)

Leverage is declining?

Change in leverage is evaluated to determine if a company is decreasing its financial risk by reducing its debt relative to its equity. A decrease in leverage is viewed positively.

Historical leverage of Transact Technologies (TACT)

Comparing the leverage of 0.0325 in 2022 to 0.0133 in 2023 for Transact Technologies (TACT), it's clear that the leverage has decreased. Over the past 20 years, TACT's leverage fluctuated, reaching its zenith in 2020 at 0.1192. For 2023, the significant reduction to 0.0133 marks a positive trend, suggesting the company is potentially reducing its financial risk and improving its balance sheet. This significant leverage reduction merits awarding a point for this criterion.

Current Ratio is growing?

Change in Current Ratio for Transact Technologies (TACT)

Historical Current Ratio of Transact Technologies (TACT)

The Current Ratio has increased to 3.0067 in 2023 from 2.2683 in 2022. This trend is positive as it indicates improved liquidity. With a Current Ratio northwards of 3, TACT is in a more comfortable position to cover its short-term liabilities compared to the industry median of 2.3065 in 2023. Historical data shows fluctuating trends with notable peaks in 2011 and recent dips in 2020. Nevertheless, achieving an increase during economic instability positions TACT as a financially resilient entity. Thus, TACT earns 1 point.

Number of shares not diluted?

The change in shares outstanding is a measure of how the number of a company's shares changes over time.

Historical outstanding shares of Transact Technologies (TACT)

When comparing the outstanding shares from 2022 to 2023 for Transact Technologies (TACT), we see a significant decrease from 9,905,000 shares to 0 shares. This indicates that all outstanding shares have been either repurchased or canceled altogether in 2023. In the context of Piotroski Analysis, a decrease in the number of outstanding shares would typically lead to adding 1 point; however, with the shares listed as 0, it suggests a complete elimination of outstanding shares which is unusual and may not be accurately represented. Therefore, this trend would not score the 1 point in traditional Piotroski Analysis. Looking at the historical data for the last 20 years, there are fluctuations in the number of shares outstanding but no precedent for complete elimination of shares, making this an outlier in historical terms.

Operating of Transact Technologies (TACT)

Cross Margin is growing?

Gross Margin: Analyzes the efficiency of the firm's core business activities. Gaining clarity on if and how it is improving or deteriorating is critical.

Historical gross margin of Transact Technologies (TACT)

Transact Technologies (TACT) saw an increase in its Gross Margin from 0.4199 (41.99%) in 2022 to 0.5287 (52.87%) in 2023. This significant rise earns TACT 1 point in the Piotroski analysis as it indicates an improvement in business efficiency. This increment fairly exceeds the industry's median Gross Margin of 0.3501 (35.01%) in 2023, showcasing TACT's superior efficiency relative to its peers. Over the last 20 years, TACT's Gross Margin has generally oscillated between 30-47%, with 2023 marking the highest point ever achieved, further bolstering the positive outlook.

Asset Turnover Ratio is growing?

The asset turnover ratio measures the efficiency of a company’s use of its assets in generating sales revenue. A higher ratio implies better performance and efficiency.

Historical asset turnover ratio of Transact Technologies (TACT)

Transact Technologies’ asset turnover ratio has increased from 1.1315 in 2022 to 1.37 in 2023. This improvement indicates that the company is now generating more revenue per dollar of assets than it did in the previous year. When compared to the historical data, this increase to 1.37 represents one of the highest asset turnover ratios seen over the past two decades. Such a positive trend earns the company 1 point in the Piotroski F-Score, reflecting its enhanced operational efficiency. Investors might view this surge as a sign of the management's ability to utilize the company's assets more effectively in driving sales growth, which is a good indicator of potential profitability going forward.


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