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Weyerhaeuser (WY) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Weyerhaeuser (WY) achieves a Piotroski F-Score of 5/9 in 2023, highlighting mixed financial health across profitability, liquidity, and efficiency aspects.

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 Weyerhaeuser (WY) 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?
0
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?
0
Asset Turnover Ratio is growing?
0

In 2023, Weyerhaeuser (WY) received a Piotroski F-Score of 5 out of 9. Here's the breakdown for each of the nine criteria: the company scored positively on net income, cash flow from operations, operating cash flow relative to net income, current ratio, and reduction in outstanding shares. However, Weyerhaeuser did not score on return on assets, leverage, gross margin, and asset turnover ratio. While the positive scores reflect strong profitability, liquidity, and shareholder returns, the negative criteria suggest areas of operational and financial inefficiency.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, Weyerhaeuser demonstrates moderate financial health with notable strengths in profitability and liquidity. However, the weaknesses in operational efficiency and leverage caution against overly optimistic expectations. For potential investors, this indicates that Weyerhaeuser could be a reasonable consideration, but it might be prudent to further investigate the areas where the company did not score well. Overall, Weyerhaeuser merits consideration, but with close attention to its operational and market risks.

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

Profitability of Weyerhaeuser (WY)

Company has a positive net income?

Net income refers to the total profit of a company after all expenses and taxes have been deducted from revenue. In the context of Piotroski analysis, a positive net income indicates potential profitability and operational efficiency.

Historical Net Income of Weyerhaeuser (WY)

For Weyerhaeuser (WY), the net income for 2023 stands at $839 million. This figure is positive, thus adding 1 point in the Piotroski analysis. Historically, Weyerhaeuser's net income has fluctuated widely over the past two decades. The lowest recorded net income was -$1,176 million in 2008 during the financial crisis, while the peak was $2,607 million in 2021. These fluctuations suggest susceptibility to market conditions, but achieving a positive net income in 2023 indicates robust recent performance.

Company has a positive cash flow?

Cash Flow from Operations (CFO) evaluates the operating efficiency and the ability of a company to generate cash from its regular business activities.

Historical Operating Cash Flow of Weyerhaeuser (WY)

Weyerhaeuser's CFO in 2023 is $1,433,000,000, which is positive. Over the past 20 years, the company's CFO has seen significant fluctuations, including negative values in 2008 and 2009 due to economic downturns. However, more recent years have shown strong positive values, signifying the company's stable operating efficiency and cash-generating capability. Hence, adding 1 point for the positive CFO in 2023 is appropriate.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) for Weyerhaeuser (WY) from 2023 compared to 2022. An increase in ROA adds 1 point in the Piotroski Score, signifying improved profitability or efficiency. If the ROA decreased, 0 points are added.

Historical change in Return on Assets (ROA) of Weyerhaeuser (WY)

The ROA for Weyerhaeuser in 2023 was 0.0489, compared to 0.1075 in 2022. This represents a decrease, not an increase, in ROA. Historically, the company's ROA fluctuated significantly over the past two decades, with the highest ROA often far below the industry median. For instance, the industry median ROA was 0.2522 in 2003 and even reached up to 0.6716 in 2022. Despite internal variations, Weyerhaeuser consistently trailed behind the industry median, and the declining trend in 2023 further highlights the company's struggle in aligning with industry profitability benchmarks. Therefore, for this criterion, Weyerhaeuser scores 0 points, indicating a worsening return on assets. This trend is negative and suggests that the company has become less efficient in generating profits from its assets over the past year.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income measures the quality of the earnings. It shows if a firm has real cash coming in, not just accounting profits.

Historical accruals of Weyerhaeuser (WY)

For Weyerhaeuser (WY) in 2023, the Operating Cash Flow was $1.43 billion while Net Income was $839 million. Clearly, the Operating Cash Flow is higher than the Net Income, adding 1 point for this criterion. This trend is positive as it suggests that Weyerhaeuser's earnings are backed by actual cash flows rather than accruals or non-cash items. Over the past 20 years, Operating Cash Flow generally remained above Net Income, which is a strong indicator of financial health and operational efficiency. For example, in 2021, the Operating Cash Flow ($3.16 billion) significantly exceeded the Net Income ($2.61 billion), reinforcing this positive attribute.

Liquidity of Weyerhaeuser (WY)

Leverage is declining?

Leverage compares a company's debt levels relative to its equity, measuring its risk.

Historical leverage of Weyerhaeuser (WY)

For Weyerhaeuser (WY), the leverage has increased from 0.2348 in 2022 to 0.2985 in 2023. This uptick signifies higher financial risk as the company has taken on more debt compared to its equity. Analyzing a historical perspective, Weyerhaeuser's leverage fluctuated significantly, notably peaking at 0.6459 in 2012. The current increase, albeit notable, still keeps leverage below many historical highs, suggesting a moderate risk level compared to previous years. Nevertheless, per the Piotroski criterion, this increase means Weyerhaeuser scores 0 points.

Current Ratio is growing?

Current ratio focuses on a business's short-term financial health and its ability to cover its current liabilities with current assets.

Historical Current Ratio of Weyerhaeuser (WY)

The Current Ratio for Weyerhaeuser (WY) has shown a noteworthy increase from 1.5782 in 2022 to 2.9353 in 2023. This increase is significant, as it demonstrates an improvement in the company's ability to meet its short-term liabilities with its current assets. Not only has WY's ratio surpassed the industry median, which stands at 1.282 in 2023, but it also reflects one of the highest ratios the company has achieved over the past 20 years. Historically, the company's current ratio witnessed fluctuations ranging from a low of 0.8262 in 2018 to a high of 3.8806 in 2009. This improvement indicates a stronger liquidity position and suggests more efficient management of assets and liabilities. A current ratio of 2.9353 suggests that for every dollar of liabilities, the company has approximately $2.94 in current assets, making it better equipped to handle its short-term obligations compared to previous years.

Number of shares not diluted?

The change in shares outstanding assesses whether a company is buying back its stock. A decrease is favorable, indicating confidence in the company.

Historical outstanding shares of Weyerhaeuser (WY)

In 2023, the outstanding shares for Weyerhaeuser decreased to 731,654,000 from 741,904,000 in 2022. This represents a reduction, thus earning Weyerhaeuser 1 point on the Piotroski scale. This trend is generally seen as positive since it reflects the company's confidence in its stock and can enhance shareholder value. Over the last 20 years, there is a notable fluctuation in outstanding shares, peaking in 2017 before gradually declining.

Operating of Weyerhaeuser (WY)

Cross Margin is growing?

Gross Margin is revised upward, reflecting a company's ability to manage production costs more effectively. A higher gross margin shows efficient cost management relative to sales.

Historical gross margin of Weyerhaeuser (WY)

In 2023, Weyerhaeuser's gross margin stood at 0.2192, notably declining from 0.3555 the previous year (2022). This decrease is significant given that the industry median gross margin in 2023 was at 0.4759, highlighting a deterioration in cost management or pricing power. Historically, Weyerhaeuser's gross margin has experienced a wide range, with peaks like 0.4017 in 2021 and lows like 0.1272 in 2008, reflecting cyclicality within the industry. The decline in 2023 places Weyerhaeuser below historical and industry benchmarks, raising concerns about recent operational efficiency and market conditions. Thus, this criterion scores 0 points due to a decrease in gross margin.

Asset Turnover Ratio is growing?

This criterion evaluates the efficiency of a company's use of its assets to generate sales. A higher turnover indicates better performance.

Historical asset turnover ratio of Weyerhaeuser (WY)

Evaluating Weyerhaeuser's (WY) asset turnover ratio, it becomes apparent that the ratio has decreased from 0.5821 in 2022 to 0.4472 in 2023. This denotes a less efficient use of assets to generate revenue in the current year compared to the previous year. Given this decline, the company does not earn an additional point for asset turnover under the Piotroski analysis. The detailed historical data shows fluctuations over the years, highlighting the volatility in the company's operational efficiency. Despite various years of stronger performance like the noticeable peak at 0.7949 in 2006 and the recent high of 0.6007 in 2021, the current trend is downward. Thus, based on this criterion for 2023, Weyerhaeuser's trend is deemed unfavorable.


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