Last update on 2024-06-05

Amcor (AMCR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Amcor's (AMCR) 2023 Piotroski F-Score is 7/9, reflecting its profitability and liquidity health. Learn more about its financial performance and investment potential.

Short Analysis - Piotroski Score: 7

We're running Amcor (AMCR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a rating from 0 to 9 that evaluates a company's financial strength. It looks at profitability, liquidity, and operating efficiency to help investors find strong, undervalued stocks. Amcor (AMCR) was analyzed, scoring 7 out of 9. The company showed positive net income and cash flow, growing Return on Assets, and Operating Cash Flow higher than Net Income, all of which indicate financial health. It also had a rising Current Ratio and reduced outstanding shares, reflecting good liquidity and capital management. However, the leverage ratio increased and the gross margin declined, posing some risks.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7, Amcor (AMCR) appears to be a strong and potentially undervalued investment. The company demonstrates solid profitability and good cash management, although there are concerns about increasing leverage and declining gross margin. If you are considering investing, it might be wise to keep an eye on these risks, but overall, the stock seems worth a closer look given its financial health and operational efficiency.

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

Profitability of Amcor (AMCR)

Company has a positive net income?

Net Income is a key indicator of a company's profitability and financial health, crucial for assessing overall performance.

Amcor's net income in 2023 is $1,048,000,000, which is positive. This positive trend is great because it signifies robust financial health and profitability. The historical data also reveal a consistent increase in net income over the past 20 years, highlighting sustainable growth. For instance, compare the net income of $243,443,926 in 2003 with $1,048,000,000 in 2023, showing an approximate four-fold increase. Hence, Amcor secures 1 point for positive net income, reflecting strong financial stability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is critical for assessing a company's ability to generate cash from its core business activities. A positive CFO is a good sign of financial health.

In the fiscal year 2023, Amcor (AMCR) reported a Cash Flow from Operations (CFO) of $1.261 billion. This positive number is a good sign, indicating that the company is generating sufficient cash from its core business operations. A positive CFO suggests that Amcor is not relying on external financing to sustain its operations, which is a marker of financial stability. Historically, this value aligns well with the company's trend of maintaining positive CFO over the past decade, although it has seen slight fluctuation.

Return on Assets (ROA) are growing?

Return on Assets (ROA) is a measure of how efficient a company's management is in utilizing its assets to generate earnings. It's an important criterion because it indicates the profitability of a company relative to its total assets.

Amcor's ROA increased from 0.0465 in 2022 to 0.0609 in 2023, resulting in an allocation of 1 point in the Piotroski analysis. This is a positive sign suggesting Amcor's growing efficiency in using its assets to generate earnings. However, it's notable that despite this improvement, Amcor's ROA still lags behind the industry median of 0.222 in 2023.

Operating Cashflow are higher than Netincome?

The comparison of Operating Cash Flow (OCF) with Net Income (NI) evaluates the quality of earnings. If OCF is higher than NI, it signifies that earnings are supported by cash and are not heavily influenced by non-cash accruals.

For the year 2023, Amcor's Operating Cash Flow stands at $1,261,000,000 while its Net Income is $1,048,000,000. This indicates that OCF indeed surpasses NI, thus adding 1 point based on the Piotroski criteria. Comparing historical data, Amcor has maintained stable operating cash flows and generally strong net incomes, suggesting robust business operations. Other significant year-over-year OCF was observed in 2019 and 2020 ($1,384,000,000 and $1,461,000,000 respectively) which outpaced the Net Incomes of $430,000,000 and $612,000,000. These reflect positively on Amcor's capacity to generate substantial cash from operations compared to net earnings. This criterion being met is good as it indicates a healthy cash position which can be reinvested into the business, pay dividends, or reduce debt.

Liquidity of Amcor (AMCR)

Leverage is declining?

Change in Leverage evaluates a firm's financial stability by comparing leverage ratios over time and assigns a score to indicate improvements.

The leverage ratio for Amcor increased from 0.3921 in 2022 to 0.4185 in 2023, indicating that leverage has risen. Examining the data from the past 20 years, the leverage ratio shows some fluctuation but no clear trending pattern. The leverage was notably lower before 2015. The rising leverage in 2023 compared to 2022 marks a step back in reducing financial risk, thus scoring 0 points for this Piotroski criterion. Higher leverage can signal increased risk and potential financial vulnerability, which isn't optimal for investor confidence.

Current Ratio is growing?

Explain the criterion for Amcor (AMCR) and why it is important to consider

Amcor has seen a slight improvement in its Current Ratio, moving from 1.147 in 2022 to 1.1859 in 2023. This increase signifies a better capability to meet its short-term liabilities with its short-term assets, enhancing liquidity. This positive trend earns a point on the Piotroski Score. Nonetheless, it is crucial to acknowledge that, historically, Amcor's Current Ratio has often been lower than the industry median. For example, in 2023, Amcor's ratio was 1.1859 compared to the industry median of 1.5762, indicating room for improvement regarding liquidity management.

Number of shares not diluted?

Changes in shares outstanding are a key criterion in the Piotroski Score model, used to assess the capital structure management of a company. A decrease in shares outstanding suggests a discipline in capital management and is generally perceived as a positive indicator.

Comparing the outstanding shares of Amcor (AMCR) in 2022 (1,509,000,000) with 2023 (1,468,000,000), we notice a decrease of 4,120,000 shares, resulting in a 1 point in the Piotroski Score. This trend signifies a positive action in managing its capital structure. Over the past two decades, the shares outstanding rose significantly in years like 2010 and 2020 but recorded a notable decrease in 2023, showcasing effective share buybacks or management efficiency.

Operating of Amcor (AMCR)

Cross Margin is growing?

Examines the year-over-year change in a company's gross margin. This is crucial as an increasing gross margin suggests improved efficiency and profitability in core operations, which is a positive indicator for investors.

Amcor's gross margin has decreased from 0.1939 in 2022 to 0.1854 in 2023, scoring 0 points for this criterion. This indicates a reduction in the company's operational efficiency, likely squeezing profits. Interestingly, examining Amcor's gross margin trajectory over the last 20 years reveals peaks and troughs, indicating potential cyclicality. In contrast, the industry median gross margin has persistently outperformed Amcor's, stressing the competitive pressures the company faces. For instance, in 2022, the industry's median gross margin stood at 0.225, significantly higher than Amcor's 0.1939. Therefore, the recent dip accentuates an area demanding strategic oversight.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It is a key indicator of operating performance.

In 2023, Amcor's Asset Turnover ratio increased to 0.8536 from 0.8404 in 2022. This represents an improvement of approximately 1.57%, indicating a more efficient use of assets to generate sales. By analyzing the long-term data, we can see that despite fluctuations over the past 20 years, the recent upward trend is a positive sign for the company's operational efficiency. This improved efficiency scores 1 point in the Piotroski framework.