Last update on 2024-06-05

Air Liquide (AIL.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Air Liquide (AIL.DE) achieves a Piotroski F-Score of 6/9 for 2023. Analyzing profitability, liquidity, leverage, and operating efficiency.

Short Analysis - Piotroski Score: 6

We're running Air Liquide (AIL.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

1. Profitability: Air Liquide (AIL.DE) has consistently shown strong profitability with a positive net income of €3,078 million in 2023, and its cash flow from operations is also robust. 2. Liquidity: The company's leverage has decreased, showing reduced financial risk. However, its current ratio has declined below the industry median, indicating potential short-term liquidity issues. 3. Operating Efficiency: Air Liquide's gross margin is growing, but asset turnover has decreased slightly, indicating a mixed efficiency outlook. Overall, Air Liquide has a Piotroski F-Score of 6, signifying a moderately strong financial position.

Insights for Value Investors Seeking Stable Income

Air Liquide (AIL.DE) demonstrates solid profitability and a strong cash flow position. However, the decline in the current ratio and asset turnover is a point of concern. With a Piotroski F-Score of 6, it shows a moderately positive outlook. Investors might find it worthwhile to consider investing in Air Liquide, but they should be cautious and monitor the company's short-term liquidity and efficiency metrics closely. Further investigation into recent operational changes or economic impacts would be prudent before making investment decisions.

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

Profitability of Air Liquide (AIL.DE)

Company has a positive net income?

The criterion evaluates whether the company has a positive or negative net income for the specified year, which is a fundamental indicator of profitability.

Air Liquide's net income for 2023 stands at 3,078,000,000. A positive net income strongly indicates that the company operates profitably. Looking at the historical data, Air Liquide has maintained a positive net income for the past 20 years, showcasing consistent performance and efficient management. This long-standing profitability garners confidence from investors. For 2023, an addition of 1 point is warranted since the net income is convincingly positive, reflecting good financial health for Air Liquide. The trend over the last two decades depicting a gradual increase in net income, from 781,800,000 in 2003 to 3,078,000,000 in 2023, points towards steady growth and resilience despite economic cycles.

Company has a positive cash flow?

Consider the Cash Flow from Operations (CFO) criterion and whether it is positive or negative

In 2023, Air Liquide (AIL.DE) reports a Cash Flow from Operations (CFO) of €6.263 billion, which is significantly positive. This positivity adds a point according to the Piotroski criteria. Over the last 20 years, Air Liquide has consistently improved its CFO, starting from €1.4518 billion in 2004 and progressively growing each year. By examining the trend, we can see a strong upward trajectory. This growth highlights solid operational efficiency and continuous improvement in cash generation from core business activities.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's ability to generate profit from its assets. An increasing ROA indicates improving efficiency.

In 2023, Air Liquide's ROA was 0.0629, up from 0.0573 in 2022. This rise signifies a 9.77% improvement, denoting enhanced efficiency in generating profit from assets. While Air Liquide’s ROA is still below the industry median of 0.2238 for 2023, the upward trend is a positive indicator of its operational enhancement. Given the improvement, the Piotroski score for this criterion is set to 1.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) exceeding Net Income suggests high earnings quality, indicating inflated net profits are less likely.

In 2023, Air Liquide's Operating Cash Flow stands at €6,263 million, significantly higher than its Net Income of €3,078 million. This disparity signals robust cash generation capabilities, reinforcing the integrity of its reported earnings. Historically, Air Liquide has consistently shown OCF exceeding Net Income, underpinned by the following trends: from a €0 OCF in 2003 to peaking at €6,263 million in 2023 alongside steady Net Income growth from €782 million in 2003 to €3,078 million in 2023. The consistent trend of high OCF application over two decades exemplifies prudent financial management and operational efficacy, warranting a score of 1 point for this criterion.

Liquidity of Air Liquide (AIL.DE)

Leverage is declining?

Change in Leverage measures a company’s degree of financial risk by comparing debt levels year over year.

The Leverage for Air Liquide increased from 0.2251 in 2022 to 0.1981 in 2023. Consequently, the Leverage score decreases in the Piotroski Analysis, resulting in 1 point being added. This trend of reducing Leverage is positive for Air Liquide as it signifies a decrease in the company's financial risk. Over the last 20 years, Air Liquide's Leverage has exhibited a general downward trend, except for minor fluctuations. For instance, Leverage was significantly higher in 2008 at 0.4192 but has steadily decreased since then, showing improved financial stability.

Current Ratio is growing?

The change in Current Ratio explains a company's ability to pay short-term liabilities with short-term assets. It helps investors gauge liquidity risk, with a higher ratio typically indicating better liquidity.

Air Liquide's Current Ratio decreased from 0.926 in 2022 to 0.8724 in 2023, indicating a reduction in short-term liquidity. This results in no point being added for this criterion. Over the last 20 years, the company's Current Ratio fell from 1.4734 in 2003 to its current low, while the industry's median fluctuated and stands at 1.5873 in 2023, considerably higher than Air Liquide. This places Air Liquide below the industry median, suggesting potential concerns about its short-term financial health. Consequently, for the Piotroski Analysis, Air Liquide gets 0 points for this criterion.

Number of shares not diluted?

Change in shares outstanding reflects the dilution or concentration of stock ownership. A decrease is a positive indicator, suggesting less dilution.

Air Liquide's outstanding shares have increased from 522,069,020 in 2022 to 522,110,068 in 2023. This represents a very marginal increase. Given the data for the last 20 years, it's evident that the company had a massive reduction in shares from 2017 to 2019 but has since seen incremental increases. This trend suggests that recent years' increases might be linked to minor equity issuances or stock-based compensation. For the Piotroski Analyses, we award 0 points here due to the increase in outstanding shares.

Operating of Air Liquide (AIL.DE)

Cross Margin is growing?

Gross margin analysis measures the percentage of revenue that exceeds the cost of goods sold, offering insights into a company's pricing strategy and operational efficiency.

Air Liquide (AIL.DE) experienced an increase in gross margin from 0.5386 in 2022 to 0.5962 in 2023. This represents an upward trend and signals an improvement in operational efficiency and pricing power. Over the last 20 years, the gross margin has fluctuated but maintains a robust position above the industry median, which was 0.2412 in 2022 and 0.2238 in 2023, indicating that Air Liquide consistently performs well relative to its industry peers. The increase in gross margin for 2023 warrants a score of 1 point in the Piotroski F-Score, reflecting a positive development.

Asset Turnover Ratio is growing?

The Asset Turnover ratio indicates how efficiently a company is using its assets to generate revenue. Higher turnover indicates a better utilization of assets.

By comparing the Asset Turnover of 0.5643 in 2023 with the 0.6217 ratio in 2022, it's evident that Air Liquide's Asset Turnover has decreased. Therefore, no additional point is awarded, setting it to 0. Analyzing the historical data over the last 20 years shows fluctuations in the ratio, peaking at 0.7463 in 2003 and declining to 0.478 in 2017. The current decline is concerning as efficient asset use is critical for profitability. Over two decades, the asset turnover trends reflect the firm’s evolving operational strategies and external economic impacts.