Last update on 2024-06-04

Vonovia (VNA.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Explore Vonovia's (VNA.DE) Piotroski F-Score analysis for 2023. Assess financial health with criteria on profitability, liquidity, and leverage. Final Score: 5/9

Short Analysis - Piotroski Score: 5

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

Vonovia scored a 5 out of 9 on the Piotroski F-Score, which evaluates profitability, liquidity, and operating efficiency. The company's financial position shows mixed results. On the downside, Vonovia has a negative net income of -€6.285 billion and a declining ROA, indicating poor profitability. However, it has a positive cash flow from operations (€1.9012 billion) and shows operational efficiency as its Operating Cash Flow is higher than net income. Despite increasing leverage, Vonovia improved its Current Ratio from 0.9773 to 1.3377. Moreover, the company experienced gross margin recovery to 47.27% and a slight increase in its Asset Turnover Ratio. Conversely, the dilution in shares outstanding is a negative aspect.

Insights for Value Investors Seeking Stable Income

Due to the mixed financial results, Vonovia's current investment attractiveness may be questionable. While the improved cash flow and operational efficiency are positive, significant negative net income, increasing leverage, and share dilution are concerning. Potential investors should approach with caution, considering these risks. It might be worthwhile to monitor the company's progress on profitability and leverage reduction before making a significant investment decision. Evaluating trends in the broader market and comparative industry performance can also be insightful.

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

Profitability of Vonovia (VNA.DE)

Company has a positive net income?

Net income is a crucial profitability metric indicating a company's total earnings after all expenses are deducted. Positive net income signals profitability, instilling investor confidence.

Vonovia's net income for 2023 stands at -€6.285 billion, marking a significant decline compared to previous years. This sharp decrease turns the net income negative, warranting a score of 0 in the Piotroski analysis. Notably, the company's net income plummeted from a high of €3.268 billion in 2020 to negative territory in 2022 and further worsened in 2023. The trend indicates a troubling financial performance and raises red flags about the company's capacity to generate profit.

Company has a positive cash flow?

Cash Flow from Operations (CFO) assesses a company's ability to generate sufficient cash from its core business operations, an essential indicator of financial health.

Vonovia's positive CFO of €1.9012 billion in 2023 indicates a healthy cash-generating capability, aligned well with a positive trend observed over the past 20 years. Their CFO has displayed a consistent upward trajectory, from €549.5 million in 2005 to the recent figure exceeding €1.9 billion. This entails a compounded annual growth rate (CAGR) of approximately 6.7%. Such performance demonstrates operational efficiency and robust revenue streams, signifying the company’s capacity to fund its operations and growth initiatives without new financing, and hence receives 1 point.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company's ability to increase profitability relative to its assets.

For Vonovia (VNA.DE), the ROA in 2023 stands at -0.065 compared to -0.0062 in 2022. This decrease is indicative of diminishing efficiency in generating profit from its assets, which is a negative trend for the company. Compared to the industry median ROA, which has consistently been positive and averaged above 0.40 over the last 20 years, Vonovia's performance is notably weak. This trend is alarming because it suggests that the company's asset utilization has deteriorated significantly over the past year. Hence, Vonovia scores 0 points for the change in ROA criterion.

Operating Cashflow are higher than Netincome?

This criterion compares the Operating Cash Flow with the Net Income, which is crucial to assess the quality of earnings.

For Vonovia in 2023, the Operating Cash Flow stood at €1,901.2 million, whereas the Net Income was -€6,285.1 million. This results in a positive outcome for this criterion as the Operating Cash Flow is indeed higher than the Net Income, resulting in a score of 1 point. To give this context, let's examine the historical data. Over the last 20 years, Vonovia's Operating Cash Flow has experienced a generally upward trend, peaking at €2,084.3 million in 2022. Conversely, the Net Income has shown volatility, dropping significantly from €3,268.5 million in 2020 to -€6,285.1 million in 2023, a stark contrast. These figures suggest that Vonovia has managed its cash flow well despite the swings in net income, reflecting a fundamental capacity in generating cash from its core operations irrespective of its reported earnings. This is favorable for the sustainability of the company's operations and enhances shareholder confidence. Thus, this trend is undoubtedly positive from the standpoint of operational robustness.

Liquidity of Vonovia (VNA.DE)

Leverage is declining?

Leverage compares a company's debt level to its equity, indicating financial risk. Persistently high or rising leverage may signify potential solvency issues, whereas decreasing leverage is a positive signal.

Vonovia's leverage rose from 0.4138 in 2022 to 0.4381 in 2023, resulting in 0 points for this Piotroski criterion. The increasing leverage highlights growing financial risk, contrasting with previous years where leverage often decreased or remained stable. Historically, leverage dipped substantially between 2013 (0.4927) and 2017 (0.3321) before inching upwards again. This upward trend since 2020, culminating in the 2023 figure, suggests caution for investors.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets.

Vonovia's Current Ratio increased from 0.9773 in 2022 to 1.3377 in 2023. This is a significant improvement and results in adding 1 point for this criterion. A higher Current Ratio indicates a better ability to meet short-term obligations. For context, Vonovia's Current Ratio has fluctuated significantly over the last 20 years, peaking at 3.7672 in 2005 and dipping to as low as 0.3557 in 2017. For 2023, despite the increase, Vonovia's current ratio of 1.3377 still lags behind the industry median of 1.6881, highlighting that while improvements are present, there is still room to reach industry standards.

Number of shares not diluted?

Change in Shares Outstanding analyzes whether the company is issuing new shares or buying back its own shares.

Over the past year, Vonovia's outstanding shares have increased from 805,372,290 in 2022 to 823,760,285 in 2023. This indicates that the company has issued more shares. According to the Piotroski F-Score, a decrease in outstanding shares is preferable as it often indicates share buybacks, which can be seen as a sign of confidence by the management. In this case, however, the increase in outstanding shares suggests dilution and is typically interpreted negatively in the context of the Piotroski analysis. Therefore, this criterion scores a 0. Historical data also shows a long-term trend of increasing shares, especially significant increases during certain years like 2010-2011 and 2014-2015.

Operating of Vonovia (VNA.DE)

Cross Margin is growing?

The Gross Margin criterion evaluates the efficiency of revenue generation after covering direct costs, reflecting profitability.

Comparing Vonovia's gross margin in 2023 (0.4727) to that in 2022 (0.0131), we observe a significant increase. This substantial rise in Gross Margin from 1.31% to 47.27% demonstrates improved operational efficiency and a robust profit-generating capability. Historically, Vonovia's margins fluctuated but generally remained competitive within the industry. Nonetheless, while the industry median of 40.39% in 2023 remains slightly lower than Vonovia's, this recovery positions the company advantageously, suggesting enhancement in cost management and pricing strategies. Therefore, this improved performance earns one point according to the Piotroski F-Score model.

Asset Turnover Ratio is growing?

Asset Turnover reflects a company's efficiency in using its assets to generate sales. It's important to assess to understand operational efficiency.

Analyzing vonovia (VNA.DE), the Asset Turnover ratio increased from 0.0529 in 2022 to 0.0541 in 2023, indicating an improvement in the company's efficiency. This 2.3% increase suggests that Vonovia has effectively utilized its assets to generate more revenue. Looking at the historical data, it's evident that while the company has had fluctuating Asset Turnover ratios over the past 20 years, peaking notably in 2011 at 0.1509, the recent upward trend aligns with their strategy to optimize operations. Therefore, Vonovia earns a point in the Piotroski Analyses for this criterion.