TPR 42.96 (+1.13%)
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Last update on 2024-06-06

Tapestry (TPR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

F-Score analysis shows Tapestry's (TPR) strong 8/9 financial strength for 2023. Discover profitability, liquidity, and efficiency insights.

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: 8

We're running Tapestry (TPR) 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?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a measure used to find strong, undervalued stocks. It's based on 9 financial criteria: profitability, liquidity, and leverage. Tapestry (TPR) scored 8 out of 9, meaning it's in strong financial health. 1. Profitability: Tapestry has positive net income ($936M) and cash flow ($975.2M) in 2023, indicating good profitability. Their ROA also improved from 2022 to 2023, showing efficient asset use. 2. Liquidity: They have a rising current ratio (1.8372 in 2023) and fewer shares outstanding, suggesting better liquidity and reduced shareholder dilution. 3. Leverage: Their leverage slightly increased in 2023, indicating some risk in financial stability, thus scoring 0 in this area. 4. Efficiency: Both gross margin and asset turnover ratio grew, showing improved operational efficiency.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 8, Tapestry (TPR) is a strong candidate for investment. The positives greatly outweigh the single area of concern in leverage. The company has shown resilience and positive trends in profitability, liquidity, and operational efficiency. It is worth considering for further research if you are an investor looking for strong performance and growth potential.

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

Profitability of Tapestry (TPR)

Company has a positive net income?

Check if net income is positive or negative. If positive: add 1 point, otherwise set to 0. Significant for profitability assessment.

Historical Net Income of Tapestry (TPR)

The net income for Tapestry (TPR) in 2023 is $936,000,000, which is positive. This indicates a healthy profitability position for the year. Over the past 20 years, Tapestry has generally exhibited a robust net income with a few fluctuations. For instance, in 2020, net income was negative at -$652,100,000, likely impacted by the global economic slowdown caused by the pandemic. Nonetheless, Tapestry recovered in the subsequent years, reflecting resilience and solid business fundamentals. This positive trend will add 1 point in the Piotroski Analysis.

Company has a positive cash flow?

CFO stands for Cash Flow from Operations. It reflects the cash a company generates from its normal business operations.

Historical Operating Cash Flow of Tapestry (TPR)

In 2023, Tapestry reported CFO of $975,200,000. This is positive, indicating successful cash generation from its core operations. Observing the historical CFO data for the past 20 years, we see a consistent positive trend with various fluctuations peaking just over $1.4 billion in 2013. Despite some drops, particularly in 2020 dropping to $407 million, the trend rebounded to above $1 billion in 2021. The increase in 2023 continues this positive trajectory, signaling robust operational health. Therefore, add 1 point.

Return on Assets (ROA) are growing?

Comparing the Return on Assets (ROA) between two years helps in assessing profitability.

Historical change in Return on Assets (ROA) of Tapestry (TPR)

In 2023, Tapestry (TPR) reported an ROA of 0.1302, up from 0.1094 in 2022. This increase in ROA is indicative of improved efficiency in generating profit from assets, which is a positive sign. Tapestry's higher than industry median ROA of 0.688 over the past 20 years demonstrates its competitive strength.

Operating Cashflow are higher than Netincome?

Positive cash flow is crucial for a company's sustainability and growth, indicating it can cover operating expenses and future investments without relying on additional debt. A higher operating cash flow compared to net income suggests robust earning quality.

Historical accruals of Tapestry (TPR)

For 2023, Tapestry (TPR) reported an operating cash flow of $975.2 million, while its net income stood at $936 million. This results in operating cash flow exceeding net income, adding 1 point to the Piotroski Score. Historically, Tapestry's cash flow from operations has shown resilience and an upward trajectory despite economic fluctuations. This trend is a positive indicator, reinforcing the company's strong cash-generating ability and effective operational management.

Liquidity of Tapestry (TPR)

Leverage is declining?

Explain the criterion for Tapestry (TPR) and why it is important to consider

Historical leverage of Tapestry (TPR)

Leverage compares the amount of debt a company has to its equity. For Tapestry (TPR), the leverage ratio in 2022 was 0.4049, increasing to 0.4173 in 2023, indicating rising debt relative to equity. This increment is typically seen as a negative trend because it suggests potential risk to financial stability. Evaluating leverage over the past 20 years, Tapestry's leverage soared from 0.1884 in 2015 to 0.4275 in 2020, landing at 0.4173 in 2023. The most recent increase from 2022 to 2023 does not favor the Piotroski Score, thus receiving 0 points.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Historical Current Ratio of Tapestry (TPR)

For Tapestry (TPR), the Current Ratio in 2023 is 1.8372, compared to 1.7523 in 2022. This demonstrates an increase in liquidity, signaling a better capability to cover short-term liabilities. With an increase in the Current Ratio, we add 1 point. This positive trend is important as it shows Tapestry's enhanced ability compared to the previous year to meet its short-term obligations. Historical data reveals that Tapestry's Current Ratio, although fluctuating, has mostly been higher than the industry median current ratio, with a few exceptions.

Number of shares not diluted?

Change in Shares Outstanding considers the fluctuation in a company's total shares available for trading in the market. Analyzing this criterion reveals insights into shareholder dilution or consolidation.

Historical outstanding shares of Tapestry (TPR)

In 2023, Tapestry (TPR) had 236,400,000 outstanding shares compared to 264,300,000 in 2022. This reflects a decrease of 27,900,000 shares. A reduction in outstanding shares in 2023 suggests that the company undertook buybacks or other actions to consolidate equity. Decreasing outstanding shares improves the earnings per share (EPS) as net income is distributed over fewer shares. Historically, this trend shows a consistent reduction over the last two decades, thereby adding 1 point to this criterion. By reducing shares, TPR diminishes shareholder dilution, signalling a more concentrated ownership beneficial for existing investors.

Operating of Tapestry (TPR)

Cross Margin is growing?

Change in Gross Margin assesses if a company's gross margin has improved over the prior year, indicating better cost control or pricing power.

Historical gross margin of Tapestry (TPR)

Tapestry's gross margin increased from 0.6957 in 2022 to 0.7078 in 2023, reflecting an improvement. This 1.74% increase is positive, suggesting enhanced operational efficiency or a robust pricing strategy. The long-term trend shows fluctuations, but 2023's margin is above the industry median of 0.688 for the same year, reinforcing the favorable outcome.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. It is vital for assessing operational efficiency.

Historical asset turnover ratio of Tapestry (TPR)

In 2023, Tapestry (TPR) posted an Asset Turnover of 0.9263 compared to 0.8544 in 2022, indicating an increase. This positive trend is significant because it signifies improved efficiency in using assets to generate sales. Historically, Tapestry's Asset Turnover reached heights such as 1.8015 in 2003 but has been on a decline since. The uptick in 2023 is a promising sign, breaking the downtrend and suggesting better asset utilization, adding 1 point in the Piotroski analysis.


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