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Last update on 2024-06-06

Ventas (VTR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze Ventas (VTR) Piotroski F-Score of 5/9 for 2023. In-depth look at profitability, liquidity, leverage, cashflow, and industry comparisons.

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 Ventas (VTR) 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?
0
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score rates firms from 0 to 9 based on their financial health using profitability, liquidity, and efficiency criteria. Evaluating Ventas (VTR) using this method resulted in a score of 5. Key observations include negative net income, increased leverage, and declining gross margins, contrasted with positive cash flow and asset turnover improvements. Despite a slight uptick in return on assets and current ratio, Ventas falls behind industry standards.

Insights for Value Investors Seeking Stable Income

Considering the Piotroski score of 5, Ventas (VTR) has an average financial health according to the analysis criteria. It shows strengths in generating operating cash flow but concerns in net income and leverage. As an investor, it may be worth cautiously considering Ventas, focusing more on how it addresses its profitability and debt management issues. Examining industry comparisons and future financial strategies can also provide deeper insights before deciding to invest.

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

Profitability of Ventas (VTR)

Company has a positive net income?

Net income is an essential profitability measure, indicating a company's ability to generate profits. A positive net income adds 1 point in the Piotroski score.

Historical Net Income of Ventas (VTR)

In 2023, Ventas (VTR) reported a net income of -$40,973,000, clearly reflecting a negative figure. Over the past two decades, Ventas has generally shown consistent profitability with remarkable peaks in 2016 ($1.36 billion) and has experienced a downturn post-2019 with consecutive negative figures in 2022 and 2023. This negative trend is concerning because it suggests recent financial struggles, which impacts investor confidence. Hence, for this criterion, the score is 0, not favoring Ventas in a Piotroski evaluation.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash a company generates from its regular business operations, a critical indicator of financial health.

Historical Operating Cash Flow of Ventas (VTR)

Ventas (VTR) has shown a positive Cash Flow from Operations (CFO) in 2023, amounting to $1,119,873,000. This figure is a key indicator of the company’s robust core business activities. Over the last two decades, VTR has demonstrated a strong ability to generate positive operating cash flow consistently, ranging from $137,366,000 in 2003 to a peak of $1,450,176,000 in 2020. This sustained positive CFO trend underscores Ventas's stable and efficient business operations. The 2023 CFO being positive adds 1 point to the Piotroski score for this criterion. Overall, this continuous positive trend reflects well on the company's operational profitability and efficiency.

Return on Assets (ROA) are growing?

The Piotroski criterion for ROA measures the company's profitability and efficiency regarding its asset utilization.

Historical change in Return on Assets (ROA) of Ventas (VTR)

Ventas (VTR) saw a slight improvement in its Return on Assets (ROA) in 2023, increasing to -0.0017 from -0.0019 in 2022. While this enhancement may seem minimal, it demonstrates a slight turnaround in asset efficiency. However, it's important to contrast this with the industry median ROA, which stood at 0.6985 in 2023. Clearly, Ventas's ROA significantly lags behind its industry peers, which may suggest potential operational inefficiencies or challenges in asset productivity. The company is awarded 1 point according to the Piotroski criterion since ROA did increase, but stakeholders may require substantial improvements in the coming periods to align with industry standards.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is a financial criterion used to assess the quality of a company's earnings.

Historical accruals of Ventas (VTR)

Based on the provided numbers, the Operating Cash Flow (OCF) for Ventas (VTR) in 2023 is $1,119,873,000, while the Net Income is -$40,973,000. This means the OCF is significantly higher than the Net Income. This trend is considered positive and would yield a score of 1 for this criterion. Over the past 20 years, VTR's OCF generally remained higher than its net income, indicating strong cash generation capability relative to its reported earnings. This suggests that the company is generating sufficient cash flow from its operations to cover its net earnings, and potentially indicates good financial health and prudent cash management. Consistent OCF higher than net income can be seen as a quality indicator, as it may also imply that net income is not significantly influenced by non-cash items or accounting adjustments.

Liquidity of Ventas (VTR)

Leverage is declining?

Change in Leverage assesses whether a company's debt levels have increased or decreased. Lower leverage is generally safer.

Historical leverage of Ventas (VTR)

The Leverage for Ventas (VTR) has increased from 0.4992 in 2022 to 0.5529 in 2023, indicating a rise in the company's debt levels. This is a negative trend from the perspective of financial risk, as higher leverage can make the company more vulnerable to financial instability and economic downturns. Despite fluctuations over the last 20 years, the general trend towards increased leverage in the latest data sets the score for this criterion at 0.

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. It is calculated by dividing current assets by current liabilities.

Historical Current Ratio of Ventas (VTR)

Comparing the current ratio of Ventas (VTR) for the years 2022 and 2023, there is an increase from 0.6117 in 2022 to 0.7343 in 2023. This improvement indicates a strengthening in the company's liquidity position. However, it is still below the industry median of 1.0418 for 2023, indicating that while Ventas is improving, it is still lagging behind its industry peers. Over the past 20 years, Ventas has shown variability in its current ratio, often below the industry median. The increase in 2023 is a positive trend but suggests the need for further improvement to achieve and maintain robust liquidity as seen in industry standards.

Number of shares not diluted?

Change in Shares Outstanding measures the difference in the number of shares a company has issued. It indicates share dilution or buybacks.

Historical outstanding shares of Ventas (VTR)

Looking at the data, the Outstanding Shares for Ventas (VTR) increased from 399,549,000 in 2022 to 401,809,000 in 2023. This is an increase of approximately 0.57%. Over the last 20 years, we observe a general upward trend in Outstanding Shares from 80,094,000 in 2003 to the current 401,809,000 in 2023. This trend implies that the company has been issuing more shares, potentially diluting existing shareholders’ value. Thus, for the Piotroski score, because the Outstanding Shares increased, it would not receive a point for this criterion.

Operating of Ventas (VTR)

Cross Margin is growing?

Gross Margin analyses the company's profitability by measuring the percentage of total revenue retained after incurring the direct costs associated with producing goods and services.

Historical gross margin of Ventas (VTR)

The Gross Margin for Ventas (VTR) has decreased from 0.4471 in 2022 to 0.4306 in 2023. This trend is concerning as it indicates a decline in profitability and efficiency in producing goods or services. For perspective, over the last 20 years, VTR's Gross Margin peaked in 2007 at 0.7433 and has been generally declining since. In comparison, the industry's median Gross Margin has fluctuated but remains higher than Ventas's recent margins at around 0.6985 in 2023. This declining trend gives Ventas a score of 0 for this criterion in the Piotroski Analysis.

Asset Turnover Ratio is growing?

Asset Turnover signifies a firm's efficiency in utilizing its assets to generate sales revenue over a specific period.

Historical asset turnover ratio of Ventas (VTR)

For Ventas (VTR), the Asset Turnover has increased from 0.169 in 2022 to 0.184 in 2023, indicating an improvement. This shows that the firm has become more efficient in utilizing its assets to generate revenue. Given the 1.5% increase, this trend is favorable and merits the addition of 1 point. Historically, the 2023 figure aligns closely with the average over the last 20 years, although slightly lower than the highs observed in the early 2000s.


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