Last update on 2024-06-04

Laboratorios Farmaceuticos Rovi (41L.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

41L.F (Laboratorios Farmaceuticos Rovi) 2023 Piotroski F-Score analysis: final score of 5/9. Comprehensive review covering profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 5

We're running Laboratorios Farmaceuticos Rovi (41L.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a tool to measure a company's financial position, and it's scored from 0 to 9. It's based on 9 criteria focusing on aspects like profitability, liquidity, and leverage. For Laboratorios Farmaceuticos Rovi (41L.F) the Piotroski Score is 5. The analysis shows that the company has positive net income and cash flow, decreased leverage, an increasing current ratio, and reduced share dilution, which are all positive signs. However, ROA, operating cash flow vs. net income, gross margin, and asset turnover have shown areas of concern.

Insights for Value Investors Seeking Stable Income

Laboratorios Farmaceuticos Rovi (41L.F) has a Piotroski Score of 5, which is moderate. The positives like strong cash flow and decreasing leverage are encouraging, but negative factors such as decreasing ROA and gross margin lower the attractiveness. It may be worthwhile to investigate further, taking into account other factors and comparative investments in the sector 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 Laboratorios Farmaceuticos Rovi (41L.F)

Company has a positive net income?

Evaluating net income is crucial for understanding a company's profitability over a period.

The net income for Laboratorios Farmaceuticos Rovi (41L.F) in 2023 is €170,335,000, which is positive. This is a significant mark of profitability. Over the last two decades, the net income shows a fluctuating but upward trend, especially from 2019 onwards, with consistent growth. Most notably, net income spiked significantly in 2021 to €153,077,000 and continued to grow in 2022 to €199,669,000. Although there's a slight dip in 2023, the net income remains high, affirming sustained profitability. Thus, this trend is highly favorable for the given criterion, resulting in +1 point according to Piotroski analysis.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) checks whether a company generates enough cash to sustain and grow its operations. Positive CFO indicates healthy operations.

The Cash Flow from Operations (CFO) for Laboratorios Farmaceuticos Rovi (41L.F) in 2023 stood impressively at €113,247,000, which is positive. This is an encouraging sign for the company, suggesting robust operational health. Analyzing the trend over the last 13 years, the company has had mostly positive operating cash flow punctuated by only a single year of negative flow in 2019 at €–9,044,000. This consistency adds an air of sustainability to their operations. Therefore, this criterion scores 1 point as the CFO is positive, illustrating the company's strong ability to generate cash from its core activities.

Return on Assets (ROA) are growing?

Change in ROA involves comparing the Return on Assets from the previous year with the current year. ROA measures a company's overall profitability relative to its total assets.

Comparing the Return on Assets (ROA) for Laboratorios Farmaceuticos Rovi in 2023 (0.203) with 2022 (0.2478), we find a decrease rather than an increase. This signifies that the company earned less return on its assets in 2023 compared to the previous year. The trend is negative and suggests decreased efficiency in utilizing company assets to generate earnings. Given the consistency of higher industry median ROA over years, from 0.7389 in 2011 to 0.4518 in 2023, it shows Rovi's ROA has been underperforming compared to the industry standards.

Operating Cashflow are higher than Netincome?

This criterion examines whether the company’s operating cash flow exceeds its net income, indicating the quality of its earnings.

In 2023, Laboratorios Farmaceuticos Rovi reported an operating cash flow of €113.25 million, whereas its net income was €170.34 million. Consequently, the operating cash flow is lower than the net income. This suggests potential earnings management and raises questions regarding the sustainability of the company's profits. Given this, we allocate 0 points for this criterion.

Liquidity of Laboratorios Farmaceuticos Rovi (41L.F)

Leverage is declining?

The Change in Leverage criterion measures the change in the company's financial leverage. Leverage is important as it indicates the level of debt used to finance assets and can signal financial health.

For Laboratorios Farmaceuticos Rovi (41L.F), financial leverage slightly declined from 0.0676 in 2022 to 0.0653 in 2023. Since leverage has decreased—indicating a marginal reduction in debt levels relative to assets—the company scores 1 point on this criterion. Historically, Rovi's leverage fluctuated notably, peaking at 0.141 in 2019 and bottoming out at 0.0412 in 2018. The recent level signifies improved leverage management, possibly suggesting stronger financial health. Therefore, this trend is generally favorable.

Current Ratio is growing?

The change in current ratio is a measure of a company’s liquidity and its ability to cover short-term obligations with its current assets. A current ratio greater than 1 indicates that a company has more current assets than current liabilities, which is generally a positive sign for short-term financial health.

The Current Ratio for Laboratorios Farmaceuticos Rovi increased from 2.1201 in 2022 to 2.5487 in 2023. This indicates an improvement in the company's liquidity position and its ability to cover short-term liabilities. Over the past years, the current ratio has seen fluctuations but the current value is an improvement from 2022. With respect to the industry median, which has generally been higher, Laboratorios Farmaceuticos Rovi's current ratio is still below but shows positive growth. Assign 1 point.

Number of shares not diluted?

The criterion assesses the changes in the number of shares outstanding over a year. A decrease is generally favorable as it often indicates buybacks, reducing supply and potentially increasing share value.

In 2023, Laboratorios Farmaceuticos Rovi had 53,192,000 outstanding shares, a slight decrease compared to 2022’s 53,466,000 shares. This reduction in outstanding shares is typically viewed as positive. Share buybacks demonstrate confidence from the company in its financial health, as it chooses to reinvest profits in itself by reducing share count. Effects over the last decade show fluctuations with a significant drop in 2017, notable increase in 2018, and relative stability from 2020 onwards. This fragmentation highlights Rovi’s strategic approach to financial structuring over time.

Operating of Laboratorios Farmaceuticos Rovi (41L.F)

Cross Margin is growing?

Change in Gross Margin measures how effectively a company is controlling production costs relative to its revenue. An increase in gross margin is generally positive as it means more profit is being retained from each dollar of sales.

The Gross Margin for Laboratorios Farmaceuticos Rovi (41L.F) in 2023 is 0.5935, a decrease from 0.6355 in 2022. Hence, the score for this criterion is 0. A decreasing gross margin might indicate rising production costs or pricing pressures. Additionally, Rovi's 2023 gross margin of 0.5935 is well below the industry median of 0.4518, which could imply industry-wide competitive pressures.

Asset Turnover Ratio is growing?

Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue. It is important to consider this criterion as a higher ratio indicates better performance.

Comparing the Asset Turnover ratios for Laboratorios Farmacéuticos Rovi (41L.F) from 2022 to 2023, we observe a slight decline from 1.0149 in 2022 to 0.9883 in 2023. This decrease signifies a drop in the efficiency with which the company is utilizing its assets to generate revenue. In numerical terms, the 2022 Asset Turnover ratio of 1.0149 suggests that for every euro of assets, the company generated approximately 1.015 euros in sales. However, in 2023, this figure dropped to 0.9883 euros in sales for every euro of assets, signaling a small yet notable dip in efficiency. According to the Piotroski criterion, because the Asset Turnover has decreased, no point is awarded for this metric. Historically, the company's Asset Turnover has shown variability, dropping to as low as 0.7737 in 2020 and peaking at 1.0149 in 2022. The 2023 ratio, though slightly reduced, is still relatively high compared to previous years, indicating a generally stabilized operational efficiency. Nevertheless, this downward trend from 2022 to 2023 is worth monitoring in the context of overall business performance.