TEVA 17.18 (+1.18%)
US8816242098Drug ManufacturersDrug Manufacturers - Specialty & Generic

Last update on 2024-06-07

Teva Pharmaceutical Industries (TEVA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Teva Pharmaceutical Industries (TEVA) scored 6/9 in the 2023 Piotroski F-Score analysis, evaluating profitability, liquidity, and operating 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: 6

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

Teva Pharmaceutical Industries (TEVA) has been evaluated using the Piotroski F-Score, which measures a company's financial strength on a scale of 0 to 9. TEVA scored 6 out of 9 based on nine criteria involving profitability, liquidity, and operational efficiency. The company showed strengths in generating positive cash flow from operations, improving return on assets, having a higher operating cash flow than net income, increasing gross margin, and better asset turnover ratio. However, it struggled with negative net income, increased leverage, a declining current ratio, and dilution of shares.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, TEVA shows a mix of strengths and weaknesses. Positive cash flow and improving efficiency metrics are encouraging. However, the company faces challenges with net losses, rising leverage, and share dilution. It is worth keeping an eye on, but you may want to investigate further into the stable positive trends and the causes behind the financial challenges. Be cautious and look for signs of consistent improvement in the weak areas before investing.

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

Profitability of Teva Pharmaceutical Industries (TEVA)

Company has a positive net income?

The criterion for Net Income looks at whether a company is profitable. Positive net income is a sign of a company generating profit, whereas negative net income suggests losses, indicating financial troubles or insufficient revenue.

Historical Net Income of Teva Pharmaceutical Industries (TEVA)

In 2023, Teva Pharmaceutical Industries (TEVA) reported a net income of -$559 million, signifying a loss. Historically, the company has experienced significant volatility in its net income. Notably, positive net income was recorded in 2003 through 2015, with a decline beginning in 2016 and culminating in substantial losses, such as -$16.265 billion in 2017. The trend depicts financial instability, raising concerns over its ability to manage costs and generate revenue effectively. Therefore, for the Piotroski score criterion, this yields a score of 0, as the net income is negative.

Company has a positive cash flow?

Cash Flow from Operations (CFO) checks if a company is generating cash from its core operational activities, which is crucial for financial stability.

Historical Operating Cash Flow of Teva Pharmaceutical Industries (TEVA)

In 2023, Teva Pharmaceutical Industries (TEVA) posted a positive CFO of $1.368 billion. This is a strong indicator of operational efficiency and suggests healthy financial stability, adding 1 point to the Piotroski Score. Historical data shows that while TEVA's CFO peaked around 2015 and has fluctuated since, the recent positive figure indicates a trend of recovering operational cash flow.

Return on Assets (ROA) are growing?

ROA measures a company's profitability relative to its total assets, indicating efficiency in using assets to generate earnings.

Historical change in Return on Assets (ROA) of Teva Pharmaceutical Industries (TEVA)

Teva Pharmaceutical Industries (TEVA) has seen its ROA improve from -0.0534 in 2022 to -0.0128 in 2023. This notable increase is indicative of a recuperation in the company's efficiency in generating earnings from its assets. A negative ROA is a red flag, signaling that a company is in distress or failing to utilize its assets effectively. However, the improvement in TEVA’s ROA suggests a positive momentum in its earnings efficiency. Historically, TEVA has struggled with a consistent decline in its ROA, evident from its 20-year trajectory. While the industry median ROA stands significantly higher at around 0.50, this trend towards a less negative ROA for TEVA is a positive sign, giving it 1 point in Piotroski’s criteria.

Operating Cashflow are higher than Netincome?

Higher operating cash flow compared to net income is a positive indicator of quality earnings and cash flow generation.

Historical accruals of Teva Pharmaceutical Industries (TEVA)

Teva Pharmaceutical Industries (TEVA) has an operating cash flow of $1.368 billion and a net income of -$559 million for the year 2023. This results in a positive indicator for the firm, indicating quality earnings and cash flow generation. Analyzing the historical data, Teva’s operating cash flow generally has been healthy, showing positive cash flows in 20 years. Even in years when the company faced net losses, like 2016 with -$16.265 billion, the operating cash flow has remained positive, presenting resilience. Given this trend, the operating cash flow exceeds net income, earning them a 1 point in Piotroski’s F-Score for this criterion. This is a good trend showing that cash is consistently flowing into the company despite net income figures which can often be affected by non-cash items such as depreciation and amortization.

Liquidity of Teva Pharmaceutical Industries (TEVA)

Leverage is declining?

This criterion assesses whether the company has reduced its financial leverage year-over-year.

Historical leverage of Teva Pharmaceutical Industries (TEVA)

Teva Pharmaceutical Industries (TEVA) has experienced an increase in leverage from 0.442 in 2022 to 0.4251 in 2023. This trend does not meet the Piotroski criterion; thus, no additional point is added. TEVA's leverage has shown fluctuations over the years, particularly increasing significantly since 2016 after more stable and lower leverage ratios in the earlier years.

Current Ratio is growing?

The Current Ratio is a measure of a company's ability to cover its short-term obligations with its short-term assets. It indicates liquidity.

Historical Current Ratio of Teva Pharmaceutical Industries (TEVA)

Comparing Teva's Current Ratio of 1.0194 in 2023 to 1.0507 in 2022, it has decreased. This means the company has slightly lower liquidity this year, failing to improve its ability to meet short-term liabilities relative to last year. This decline results in a score of 0 according to the Piotroski F-Score. Despite the minor decrease, when evaluated in a broader context, the ratio has shown considerable volatility over the past two decades. Historically, Teva's Current Ratio has substantially fluctuated with peaks and troughs attributable to different business cycles and market conditions. When pitted against the industry median, Teva's ratio is consistently lower, reflecting a less favorable liquidity position compared to its peers.

Number of shares not diluted?

This metric assesses whether the company is issuing new shares. A decrease in outstanding shares is generally positive as it suggests management is returning capital to shareholders through buybacks, thus increasing each share's value.

Historical outstanding shares of Teva Pharmaceutical Industries (TEVA)

Between 2022 and 2023, Teva Pharmaceutical Industries' outstanding shares increased from 1,110,000,000 to 1,119,000,000. Over the last 20 years, there has been a significant increase in the number of shares, with the exception of specific years such as 2013 and 2014, when there were minor decreases. The consistent increase in outstanding shares suggests potential dilutive effects, which is unfavorable for existing shareholders. Therefore, Teva receives 0 points for this criterion.

Operating of Teva Pharmaceutical Industries (TEVA)

Cross Margin is growing?

The first criterion examines the trend in a company's gross margin, a key metric of profitability that analyzes the relationship between revenue and cost of goods sold.

Historical gross margin of Teva Pharmaceutical Industries (TEVA)

Teva Pharmaceutical Industries (TEVA) has shown an improved gross margin in 2023, increasing from 0.4672 in 2022 to 0.4825. This uptick in gross margin is indicative of better cost management or higher efficiency in production processes. Historically, the company has fluctuated in its gross margin values, with notable higher figures around the mid-2000s and a peak of 0.5779 in 2015. However, compared to the industry median gross margin, which stands at 0.5013 in 2023, TEVA still lags behind. The trajectory indicates a positive movement, scoring 1 point according to the Piotroski Analysis. Despite the relative underperformance to the industry, the improved margin signifies healthier financials and better profitability for TEVA.

Asset Turnover Ratio is growing?

Change in Asset Turnover for Teva Pharmaceutical Industries (TEVA) looks at the efficiency of the company in using its assets to generate sales. This metric analyzes the revenue generated per unit of asset and is crucial as a rising turnover indicates more efficient management.

Historical asset turnover ratio of Teva Pharmaceutical Industries (TEVA)

In 2023, Teva's Asset Turnover increased to 0.3622 from 0.3256 in 2022, indicating an improvement in efficiency. This uptick is positive, as it reflects the company's ability to utilize its assets better to generate revenue. Historically, the company's Asset Turnover had seen a decline from 0.6215 in 2003 to a low of 0.2738 in 2017. The recent increase is a reversal of this trend, suggesting better asset management. Hence, 1 point is added for this criterion.


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