UTHR 334.35 (+0.52%)
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Last update on 2024-06-07

United Therapeutics (UTHR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

United Therapeutics (UTHR) holds a Piotroski F-Score of 5 out of 9 in 2023, signaling moderate financial health across 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: 5

We're running United Therapeutics (UTHR) 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?
0
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

United Therapeutics (UTHR) has been analyzed using the Piotroski F-Score, a metric that ranges from 0 to 9 to evaluate a company's financial strength based on profitability, liquidity, and operating efficiency. UTHR has received a Piotroski Score of 5 out of 9. This score comes from positive marks in net income, cash flow from operations, return on assets, decreased leverage, and increased asset turnover ratio. However, it did not score points for operating cash flow being lower than net income, declining current ratio, increased number of shares, or decreased gross margin.

Insights for Value Investors Seeking Stable Income

United Therapeutics (UTHR) shows a medium-level financial strength with a Piotroski Score of 5. The company has several positive financial indicators such as positive net income, increasing cash flow from operations, and decreasing leverage, which are promising for potential investment. However, there are some concerns like the declining current ratio and gross margin, and the dilution of shares. Overall, UTHR can be considered a balanced investment, but potential investors should be cautious and perhaps investigate further into the specific concerns before making any decisions.

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

Profitability of United Therapeutics (UTHR)

Company has a positive net income?

Netincome is a measure of a company's profitability after accounting for all expenses and taxes. Positive net income is indicative of financial health.

Historical Net Income of United Therapeutics (UTHR)

For United Therapeutics (UTHR), the net income for 2023 is $984.8 million, which is positive. Over the last 20 years, the company’s net income has been mostly positive, with some fluctuations, including negative figures in 2003, 2008, and 2019. The latest figure represents a significant improvement over previous years, signaling strong financial performance. Therefore, United Therapeutics earns 1 point for this criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash generated by the company's core business operations. Positive CFO is important as it shows the company is generating sufficient cash to maintain and grow operations.

Historical Operating Cash Flow of United Therapeutics (UTHR)

In 2023, United Therapeutics (UTHR) reported a CFO of $978 million, which is positive. Historically, the company has fluctuated with both negative and positive CFO values, with notable negative dips in 2003, 2008, and 2019. The recent trend, from 2020 to 2023, shows increasing positive CFO, reflecting strong operational performance. Thus, for the Piotroski Score, UTHR earns 1 point for having positive CFO, demonstrating healthy cash flow from its core operations, crucial for sustaining growth and managing expenditures.

Return on Assets (ROA) are growing?

Return on Assets (ROA) is the ratio of net income to total assets. It gauges a company\'s efficiency in generating profit from its assets and provides insight into management\'s effectiveness.

Historical change in Return on Assets (ROA) of United Therapeutics (UTHR)

In 2023, United Therapeutics (UTHR) achieved a Return on Assets (ROA) of 0.1491, an improvement over the 0.1297 recorded in 2022. This upswing is a positive indicator, highlighting enhanced efficiency in asset utilization. However, it's essential to compare these figures against the broader industry context. Historically, over two decades, UTHR's ROA has fluctuated. Notably, the industry's median ROA has consistently been higher than UTHR's, often significantly so. For instance, in 2023, the industry's median ROA was 0.4518, nearly three times that of UTHR's. This persistent gap suggests industry peers are leveraging their assets more effectively. Despite the internal improvement in 2023, UTHR still struggles to meet the industry benchmark. Hence, while the ROA increase reflects a welcome trend, United Therapeutics must strive for greater strides to achieve industry parity and surpass its counterparts. Consequently, for the Piotroski Score, UTHR earns 1 point under this criterion, owing to the year-over-year improvement.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is crucial because it indicates that a company's core business operations are generating sufficient cash to sustain the business, rather than relying on accounting profits.

Historical accruals of United Therapeutics (UTHR)

United Therapeutics' operating cash flow for 2023 stands at $978 million, slightly lower than the net income of $984.8 million. Based on the Piotroski criteria, this results in no points being added (0 points) for this specific metric as the operating cash flow is marginally lower than net income. While the trend indicates a solid generation of cash flow, it is worth noting that having operating cash flow at least as high as net income is generally viewed favorably by investors. Historically, United Therapeutics has shown fluctuations in this metric, with variations over the past two decades including years such as 2014 and 2016 where operating cash flow stood significantly higher than net income. However, for 2023, the close figures still suggest stability, though it misses the preferred target by a narrow margin, indicating that there might still be a level of accruals influencing the net income.

Liquidity of United Therapeutics (UTHR)

Leverage is declining?

Change in Leverage analyzes the shift in a company's debt-to-equity ratio YoY (Year over Year). A decrease indicates a reduction in debt relative to equity, showcasing improved financial health.

Historical leverage of United Therapeutics (UTHR)

United Therapeutics' leverage has decreased from 0.1324 in 2022 to 0.0419 in 2023, giving it 1 point for this criterion. This decreased leverage trend can be interpreted as a positive signal, reflecting a reduction in the company's debt and potentially lower financial risk. To provide historical context, analyzing the data from the past 20 years reveals fluctuations in leverage, with notable Mminimized values in recent years, underscoring prudent fiscal management in 2023.

Current Ratio is growing?

Current Ratio is a key financial metric that measures a company's ability to cover its short-term obligations with its short-term assets, highlighting liquidity.

Historical Current Ratio of United Therapeutics (UTHR)

The Current Ratio for United Therapeutics (UTHR) decreased from 9.8494 in 2022 to 4.4145 in 2023. Although this is a decline, UTHR's Current Ratio in 2023 is still higher than the industry median of 5.7831, indicating relatively strong liquidity. Despite the drop, the ratio suggests the company is more than capable of covering its short-term liabilities, but it does not earn a point in the Piotroski score for this criteria due to the decrease.

Number of shares not diluted?

This criterion measures the change in the number of shares outstanding, indicating if a company is diluting or consolidating its shares, which affects shareholder value.

Historical outstanding shares of United Therapeutics (UTHR)

For United Therapeutics (UTHR), the outstanding shares have increased from 45,500,000 in 2022 to 46,800,000 in 2023. This increase means the company did not consolidate its shares; instead, it diluted them, which can potentially decrease shareholder value by reducing the ownership percentage of existing shareholders. Hence, this criterion results in 0 points. Over the last 20 years, the number of outstanding shares has fluctuated, but 2023 marks an increase, reversing the trend of share reduction observed in previous years (2018-2021). This increase in shares outstanding can indicate new equity issuance for fundraising or employee stock options, but it is generally seen negatively in Piotroski’s scoring system.

Operating of United Therapeutics (UTHR)

Cross Margin is growing?

Gross Margin indicates the percentage of revenue that exceeds the company's cost of goods sold. It reflects the efficiency and profitability.

Historical gross margin of United Therapeutics (UTHR)

For United Therapeutics (UTHR), the Gross Margin decreased from 0.9217 in 2022 to 0.8894 in 2023. This is a drop and therefore the criterion does not favor the company concerning the Piotroski score. Over the span of twenty years, the company's Gross Margin has fluctuated but has generally remained significantly above the industry median. Despite the recent decline, UTHR's Gross Margin in 2023 is still remarkably higher than the industry median of 0.4518 for the same year, demonstrating a continued strong advantage.

Asset Turnover Ratio is growing?

The Change in Asset Turnover evaluates the efficiency of a company in using its assets to generate revenue. An increase is a positive indicator.

Historical asset turnover ratio of United Therapeutics (UTHR)

In 2023, United Therapeutics (UTHR) had an Asset Turnover of 0.3523, compared to 0.3453 in 2022. This indicates an increase in Asset Turnover, which is positive. Over the last 20 years, the Asset Turnover ratio has generally fluctuated, peaking at 0.7205 in 2015. Increasing the ratio from 0.3453 to 0.3523 adds 1 point in the Piotroski score, suggesting better asset utilization and efficiency. The upward trend, though modest, reflects management’s focus on improving operational efficiency.


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