Last update on 2024-06-04

Iberdrola (0HIT.IL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Iberdrola (0HIT.IL) scores 7/9 on the Piotroski F-Score for 2023, indicating strong financial health, profitability, and operational efficiency.

Short Analysis - Piotroski Score: 7

We're running Iberdrola (0HIT.IL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Iberdrola (0HIT.IL) has a strong Piotroski F-Score of 7 out of 9, indicating a solid financial position. The company shows positive trends in profitability, liquidity, and operational efficiency with notable improvements in net income, cash flow, return on assets, and the current ratio. However, there are concerns about rising leverage and a decline in asset turnover ratio, which may affect its competitive edge. The gross margin increase is a positive sign of better profitability, but the company needs to address its leverage and asset turnover issues to maintain its financial health.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Iberdrola shows potential as a strong, undervalued investment, earning 7 out of 9 points. Its consistent profitability, positive cash flow, and improved current ratio are encouraging. However, investors should be cautious about the rising leverage and declining asset turnover. It could be worthwhile to further investigate these areas before making an investment decision. Overall, Iberdrola appears to be a promising stock, particularly if the company can manage its debt and improve asset utilization.

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

Profitability of Iberdrola (0HIT.IL)

Company has a positive net income?

Netincome refers to the profitability of a company after all expenses and taxes have been deducted from total revenue.

For the year 2023, Iberdrola's net income stands at €4,803 million, which is a clear indicator of profitability. Historical data shows a robust upward trend over the last decade, starting from €2,597,618,000 in 2013 and increasing consistently to reach €4,803,000,000 in 2023. The net income has been positive for the last 14 years, highlighting Iberdrola's sustained financial health. This upward trajectory is particularly impressive given the external economic challenges faced over these years. As the net income for 2023 is positive, according to Piotroski's criteria, Iberdrola earns 1 point.

Company has a positive cash flow?

This criterion examines whether the company's cash flow from operations (CFO) is positive. It assesses the firm's ability to generate cash from its core business activities, indicating its financial strength.

The CFO for Iberdrola in 2023 is €12,130,000,000, which is significantly positive and therefore worth 1 point. This trend has been growing over the years, as shown by historical data: from €5,805,499,000 in 2013 to €12,130,000,000 in 2023. Positive CFO reflects a healthy operational performance capable of sustaining and growing the business. Iberdrola's ability to consistently generate substantial cash from its operations indicates a robust financial foundation and effective operational management, reflecting well on its long-term sustainability and profitability.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company's profitability relative to its total assets. An increasing ROA indicates improving efficiency in using assets to generate earnings.

Comparing Iberdrola's ROA of 0.032 in 2023 to its ROA of 0.0297 in 2022, we observe an increase, garnering an additional point in the Piotroski Analysis. This upward movement, though modest, is nevertheless positive, suggesting enhanced asset utilization and profitability. Over the past 13 years, Iberdrola's operating cash flow has also exhibited a significant upward trend, rising from €5.7 billion in 2017 to €12.13 billion in 2023, indicating improved liquidity and operational efficiency. However, it's worth noting the industry median ROA stands markedly higher at 0.3416 in 2023. While Iberdrola's ROA improvement is favorable on a standalone basis, further enhancements are required to align more competitively with industry standards.

Operating Cashflow are higher than Netincome?

This criterion checks if a company's operating cash flow exceeds its net income, which indicates efficient cash management.

For Iberdrola (0HIT.IL), the operating cash flow in 2023 is €12,130,000,000, while the net income is €4,803,000,000. Since the operating cash flow is significantly higher than the net income, this satisfies the criterion and earns a score of 1 point. This trend is favorable as it demonstrates that the company is proficient in converting its revenue into cash flow. Over the last 14 years, the company has seen a noticeable increase in both operating cash flow and net income, trending positively annually, reinforcing the idea of efficient financial management.

Liquidity of Iberdrola (0HIT.IL)

Leverage is declining?

Change in Leverage measures how a company's financial leverage (debt levels) trends over time.

The leverage for Iberdrola has increased from 0.2571 in 2022 to 0.3276 in 2023. This trend, indicated by a significant increase in leverage, requires careful attention. A higher leverage ratio means that the company is using more debt to finance its operations, which can be risky especially in times of economic downturn. Over the last decade, Iberdrola's leverage was relatively stable, ranging between 0.2083 and 0.2645, until a sharp increase in 2023. This surprising uptick to 0.3276 could suggest a strategic shift, but it also raises concerns about potential vulnerabilities. Therefore, it garners zero points as this isn't a positive trend per the Piotroski criteria.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. It is a key indicator of liquidity.

Iberdrola's Current Ratio increased from 0.8053 in 2022 to 0.8216 in 2023, indicating a slight improvement in liquidity. This upward trend, although minor, is a positive sign as it reflects the company's enhanced ability to cover short-term liabilities. Moreover, comparing to the industry's median current ratio of 0.8538 in 2023, Iberdrola still remains slightly below the industry standard, implying room for further improvement. Additionally, a historical perspective over the past 20 years shows fluctuations with an overall trend hovering around the 0.8 to 0.9 range. Thus, while Iberdrola scores an additional point for an increased current ratio in 2023, the slight improvement is best understood within a broader context of longstanding liquidity challenges relative to its industry peers.

Number of shares not diluted?

Change in shares outstanding assesses if a company is diluting shareholders' equity by issuing additional shares. A decrease typically signals shareholder value preservation.

In 2023, Iberdrola's outstanding shares numbered 6,431,576,450, compared to 6,657,792,549 in 2022. This reflects a reduction, thereby preserving shareholder value. However, the long-term trend shows fluctuations, signaling potential periodic equity dilution. Hence, add 1 point for 2023.

Operating of Iberdrola (0HIT.IL)

Cross Margin is growing?

The change in gross margin criterion assesses the company's ability to enhance profitability from its core operations. It is considered better if the gross margin increases over time.

The gross margin for Iberdrola increased from 0.3744 in 2022 to 0.4723 in 2023, suggesting that the company improved its profitability over this period. This increase of approximately 26.1% is a positive sign, indicating better cost management or possibly higher revenue generation relative to its production costs. When analyzing historical data, Iberdrola's gross margin has shown substantial fluctuations, peaking at 0.4871 in 2020 before dipping to 0.4362 in 2021 and further to 0.3744 in 2022. The recent recovery in 2023 is encouraging, especially since it sits well above the industry median of 0.3416 for the same year. Therefore, this criterion would score 1 point as the gross margin has increased.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency in utilizing its assets to generate sales. It's important to gauge whether a company is becoming better at using its assets efficiently.

In 2023, Iberdrola's Asset Turnover ratio was 0.3287, a decline from 0.3697 in 2022. Thus, we allocate 0 points for this criterion. Reviewing the longer trend from the provided data, Asset Turnover fluctuated over the last 20 years, hitting a low in 2016 at 0.2651 but peaking recently in 2022. The latest decline suggests a setback in efficiencies post-peak. A ratio dip indicates that in 2023, Iberdrola generated fewer sales per unit of asset, pointing towards potential inefficiencies in asset utilization or underlying market conditions impacting performance adversely.