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Last update on 2024-06-05

Veolia Environnement (VVD.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analysis of Veolia Environnement (VVD.DE) using the Piotroski F-Score for 2023. Final score: 6/9. In-depth evaluation of financial health, efficiency, and profitability.

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: 6

We're running Veolia Environnement (VVD.DE) 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?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score measures a company's financial health on nine criteria. Veolia Environnement scored 6 out of 9, indicating a moderately strong financial position. The company showed positive net income of €937 million, strong cash flow from operations at €5,005 million, and an improvement in Return on Assets. However, it saw an increase in leverage, a decrease in the current ratio, and reduced asset turnover ratio. The decrease in gross margin and an unexplained drop in outstanding shares also affect its overall financial standing.

Insights for Value Investors Seeking Stable Income

Considering the Piotroski F-Score of 6, Veolia Environnement exhibits some strengths, particularly in profitability and cash flow. However, issues with leverage, liquidity, and asset efficiency are concerning. It could be worthwhile for investors looking for moderately strong stocks, but further investigation into the company's leverage and share reduction is recommended before making a decision.

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

Profitability of Veolia Environnement (VVD.DE)

Company has a positive net income?

Net income refers to a company's total earnings, reflecting revenues minus costs, expenses, and taxes. It is important because it shows the company's profitability.

Historical Net Income of Veolia Environnement (VVD.DE)

Veolia Environnement's net income for 2023 stands at €937 million, a positive figure, awarding it 1 point in the Piotroski analysis. Compared to previous years, this is a significant increase, continuing a multi-year upward trend from €88 million in 2020 and €716 million in 2022. This strong net income growth can indicate healthy operational performance and profit maximization strategies.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the amount of cash generated by a company's regular business operations. It's crucial to assess whether a firm can maintain and grow its operations and to evaluate its liquidity and cash health.

Historical Operating Cash Flow of Veolia Environnement (VVD.DE)

For Veolia Environnement (VVD.DE) in 2023, the CFO is €5,005,000,000, which is positive. This indicates strong operational cash flow, suggesting that Veolia's main business activities generate substantial cash. Comparatively, this is an upward trend from previous years, particularly when compared to the €1,763,000,000 in 2013. This continual positive and increasing trend over the last decade is a good sign for shareholders, as it reflects growing operational efficiency and potential profitability. Thus, for this criterion, Veolia scores 1 point.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) measures how effectively a company is using its assets to generate earnings. Comparing the ROA year-over-year helps investors understand the efficiency trend.

Historical change in Return on Assets (ROA) of Veolia Environnement (VVD.DE)

Veolia Environnement's ROA increased from 0.0113 in 2022 to 0.0128 in 2023, marking an improvement. This is a good sign as it indicates better asset utilization, adding 1 point to the Piotroski score. However, despite this improvement, Veolia's ROA still lags substantially behind the industry median of 0.3375 for 2023, suggesting room for further efficiency gains.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) refers to the cash generated from the normal operations of a company. A higher OCF compared to Net Income suggests better quality of earnings.

Historical accruals of Veolia Environnement (VVD.DE)

For Veolia Environnement (VVD.DE) in 2023, Operating Cash Flow stands at €5,005 million, significantly higher than its Net Income of €937 million. This disparity results in a Piotroski score of 1 for this criterion, signaling robust cash flow generation relative to net income. Over the past 20 years, the trend shows a consistent increase in OCF, particularly spiking in recent years, while net income exhibits some volatility. The positive accrual trends complement this upwards trajectory in OCF.

Liquidity of Veolia Environnement (VVD.DE)

Leverage is declining?

The criterion examines whether the company has reduced its leverage. A decrease in leverage indicates lower financial risk, which is positive for shareholders.

Historical leverage of Veolia Environnement (VVD.DE)

In 2023, Veolia Environnement's (VVD.DE) leverage increased to 0.2524 from 0.2643 in 2022, reflecting a financial risk increase. Hence, the company scores 0 points. Historically, their leverage trends have fluctuated, peaking in 2005 at 0.3782 and the 2023 figure being relatively moderate compared to past values.

Current Ratio is growing?

The current ratio compares a company's current assets to its current liabilities, indicating its ability to pay short-term obligations. An increase suggests an improvement in liquidity.

Historical Current Ratio of Veolia Environnement (VVD.DE)

Comparing the Current Ratio of Veolia Environnement, it has decreased from 0.9832 in 2022 to 0.9295 in 2023. This trend is not favorable, indicating a reduction in the company's liquidity and its ability to cover short-term liabilities with its short-term assets. Over the past 20 years, the company’s current ratio has fluctuated but has mainly been below the industry median. With the latest decrease, which goes against the trend of industry median moving towards 0.949 in 2023, Veolia Environnement performs relatively poor. Hence, no point is awarded for this criterion.

Number of shares not diluted?

This criterion evaluates whether a company's outstanding shares have decreased over the evaluation period, indicating potential share buybacks which can signal strong financial health.

Historical outstanding shares of Veolia Environnement (VVD.DE)

Comparing the outstanding shares, Veolia Environnement's shares outstanding significantly decreased from 688,000,000 in 2022 to 0 in 2023. Looking at the historical data, this trend signifies a sharp decline. Given these figures, according to the Piotroski Score, there's technically a decrease; however, such a substantial drop might indicate a corporate restructuring, merger, delisting, or other significant event rather than a simple buyback. Hence, awarding 1 point could be contingent upon further clarity regarding the nature of this decrease.

Operating of Veolia Environnement (VVD.DE)

Cross Margin is growing?

The Change in Gross Margin criterion evaluates whether a company has improved its core earnings ability by comparing the gross profit margins of the current and previous years. A higher gross margin in the current year relative to the previous year suggests better operational efficiency, hence a positive score of 1 is assigned if it increased.

Historical gross margin of Veolia Environnement (VVD.DE)

For 2023, Veolia Environnement reported a gross margin of 0.1654, slightly down from 0.1666 in 2022. This results in a decrease which means Veolia Environnement does not earn a point for this criterion. Additionally, comparing the 20-year trend, Veolia's gross margin has fluctuated but remained relatively stable. The industry median has generally been much higher, indicating that, while Veolia's gross margin has decreased, its historical stability could still imply decent operational resilience compared to peers. However, for Piotroski scoring, the drop results in a score of 0.

Asset Turnover Ratio is growing?

Asset turnover ratio measures a company's efficiency in generating sales from its assets. It is calculated by dividing the net sales by the average total assets. This metric is important as it highlights how effectively the company is utilizing its assets to produce revenue. A higher ratio indicates better performance.

Historical asset turnover ratio of Veolia Environnement (VVD.DE)

Comparing the asset turnover of 0.6218 in 2023 with 0.6787 in 2022, it is evident that the asset turnover has decreased. This suggests that Veolia Environnement has become less efficient in utilizing its assets to generate revenue over the past year, which is a negative trend. Given that the criterion states to add 1 point if the asset turnover increased and set it to 0 if it did not, the result here would be 0. Examining the 20-year historical data, Veolia's asset turnover ratio has shown fluctuating trends, with a high of 0.7591 in 2008 and various ups and downs, culminating in the recent decline in 2023. This inconsistency indicates volatility in asset utilization efficiency over the years.


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