Last update on 2024-06-07

ZEAL Network (TIMA.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze ZEAL Network's (TIMA.DE) financial strength using the Piotroski F-score. See the 2023 summary with a final score of 6/9.

Short Analysis - Piotroski Score: 6

We're running ZEAL Network (TIMA.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is used to evaluate a company's financial strength based on 9 criteria divided into profitability, liquidity, and operating efficiency. For ZEAL Network (TIMA.DE) in 2023, the analysis returned an F-Score of 6 out of 9, indicating a reasonably strong financial position. Highlights include positive net income (€12.849M), positive cash flow (€25.567M), and increased Asset Turnover ratio (0.2717). However, areas needing improvement include a decreasing Return on Assets (ROA) and a declining current ratio, suggesting concerns in asset utilization and liquidity.

Insights for Value Investors Seeking Stable Income

With an F-Score of 6, ZEAL Network (TIMA.DE) shows decent financial health and a strong ability to generate cash. The company is worth considering, especially if you believe it can address low ROA and improve its current ratio. Its strong cash flow and reduced leverage make it a potentially good investment opportunity for those looking for stocks with robust operational performance and managed risk. However, monitor the liquidity closely as that can impact short-term stability.

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

Profitability of ZEAL Network (TIMA.DE)

Company has a positive net income?

Net income is an essential metric representing a company's profitability after all expenses have been deducted from total revenue. It gives investors insights into the company's ability to generate profit from operations and is a key component in the Piotroski Score, which measures financial strength.

ZEAL Network (TIMA.DE) recorded a net income of €12.849 million in 2023. Given that this value is positive, it merits 1 point in the Piotroski Score. Analyzing the past 20 years, ZEAL Network has maintained profitable years except in 2006 and 2007. Notably, the company had exceptional profits in 2010, 2011, and 2012, reflecting underlying robust financial health. Thus, this trend is favorable for ZEAL Network as it indicates consistent profitability.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion examines whether a company's CFO is positive, which can indicate healthy, sustainable operating performance.

The CFO for ZEAL Network in 2023 is €25.567 million, which is positive. This is a favorable trend for the company, thereby adding 1 point in the Piotroski score. Historically looking at the data, ZEAL Network has consistently maintained positive CFO, underscoring a robust operational capability. Particularly in 2009, the CFO was exceptionally high at €30.216 million, while in recent years like 2021 and 2022, the figures were equally strong at €25.996 million and €28.489 million respectively, indicating sustained financial stability.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is a measure of how efficiently a company is utilizing its assets to generate profit compared to the previous year. This criterion is important for investors as it reflects the management's ability to improve operational efficiency and profitability over time.

In 2023, ZEAL Network (TIMA.DE) reported an ROA of 0.0301, compared to 0.0331 in 2022. This indicates a decline in the company's efficiency in using its assets to generate profit. Hence, no point is added for this criterion. Over the last 20 years, the ROA has shown significant fluctuations with a peak trend between 2011 to 2013. However, the industry's median ROA over the same period has consistently been higher than ZEAL Network's ROA, suggesting the company needs to improve its asset utilization efficiency to match or exceed industry standards.

Operating Cashflow are higher than Netincome?

The criterion where operating cash flow exceeds net income indicates strong cash generation ability of a company. It reflects efficient financial management and suggests less earnings manipulation.

For ZEAL Network (TIMA.DE) in 2023, the Operating Cash Flow (OCF) stands at €25,567,000 whereas Net Income is €12,849,000. Since the OCF is higher than Net Income, ZEAL Network scores 1 point on this criterion. A consistently higher OCF compared to Net Income is often seen as a positive sign as it suggests that the income is not solely reliant on non-cash earnings. Analyzing the trend over the last 20 years, ZEAL Network has demonstrated strong cash generation capabilities, with OCF frequently surpassing Net Income. This not only highlights the company's robust operational efficiency but also builds investor confidence regarding sustainable cash flows.

Liquidity of ZEAL Network (TIMA.DE)

Leverage is declining?

Changes in leverage indicate how a company's debt level has changed relative to its equity. It is important because it affects the company's risk profile and interest obligations.

Comparing the leverage of 0.0578 in 2022 with the leverage of 0.046 in 2023, the leverage has decreased, indicating a reduction in the firm’s debt relative to its equity. This can be seen as a positive trend because it suggests the company is managing its debt more effectively. Historically, ZEAL Network's leverage has fluctuated modestly. For example, it was 0.0249 in 2021, dipped to 0.013 in 2020, and was at 0.017 in 2019. The decrease in 2023's leverage from 2022's level shows a proactive approach to risk management and strengthens the financial stability of the company. Hence, 1 point is added according to Piotroski's criteria.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations with short-term assets. It is calculated as current assets divided by current liabilities. A higher ratio indicates greater liquidity and a stronger financial health, enhancing the company's ability to cover its debts.

In 2023, ZEAL Network's current ratio was 1.5973, a significant drop from 3.1313 in 2022. This indicates a weakened ability to meet short-term liabilities, which is concerning from a liquidity standpoint. Over the last 20 years, the current ratio for ZEAL Network has fluctuated, peaking at 4.5894 in 2013 and bottoming out at 1.4873 in 2004. The industry median current ratios over the same period have generally been lower, often hovering around 1 to 1.5, only occasionally surpassing 2. While ZEAL Network has historically maintained a higher current ratio compared to the industry median, the sharp decline in 2023 is alarming. Therefore, no point can be awarded for an increased current ratio.

Number of shares not diluted?

Change in Shares Outstanding looks at the difference in shares over time to assess dilution risk, evaluating corporate activities like buybacks or new issuance.

In 2023, ZEAL Network had 21,656,120 outstanding shares, compared to 22,304,795 shares in 2022. This shows a decrease in outstanding shares by approximately 3%. Considering the trend over the last 20 years, it’s clear there have been fluctuations. However, a reduction in shares outstanding in 2023 is positive, suggesting potential share buybacks or other capital management strategies aimed at value creation. This criterion merits a score of 1 point, indicating a favorable reduction in share dilution.

Operating of ZEAL Network (TIMA.DE)

Cross Margin is growing?

Change in Gross Margin reflects a company's efficiency in transforming revenue into profits. It is crucial as consistently high or improved margins indicate strong business performance.

The Gross Margin of ZEAL Network decreased slightly from 0.8987 in 2022 to 0.8965 in 2023. Despite this minor decline, ZEAL Network's Gross Margin remains substantially higher than the industry median of 0.5252 in 2023. This trend, although not positive for the specific criterion, still showcases the company's robust profitability in comparison to the industry. Historically, ZEAL has maintained higher Gross Margins than the industry median, which underscores its strong position in the market. However, for this criterion, since the Gross Margin did not increase, we set the score to 0.

Asset Turnover Ratio is growing?

Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue. This indicator is significant for investors as it reflects the operational performance and managerial efficiency of the business.

The Asset Turnover ratio for ZEAL Network has increased from 0.2185 in 2022 to 0.2717 in 2023, indicating an improvement. Over the last two decades, this ratio has shown significant variability, peaking at 1.0244 in 2011 and reaching a low of 0.1674 in 2021. The recent increase is a positive trend, suggesting enhanced operational efficiency in generating revenue from its assets. This trend is noteworthy considering the prior years' fluctuations and hints at a potential turnaround or improvement in strategic business operations. Hence, adding 1 point for this criterion is justified.