Last update on 2024-06-05

Alstom (AOMD.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Alstom (AOMD.DE) achieves a strong Piotroski F-Score of 7/9 in 2023, highlighting improvements in profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 7

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

We analyzed Alstom (AOMD.DE) using the Piotroski F-Score, a 9-point system to measure a company's financial strength. Alstom scored 7, indicating relatively good health. However, detailed analysis reveals some complexities: 1. Profitability: - Negative Net Income: -€132 million in 2023, which scores 0. Historically volatile. - Positive Cash Flow: €606 million in 2023, reversing previous negative trends, scores 1. - Improving ROA: Still negative in 2023 but better than 2022, scores 1. - Operating Cash Flow higher than Net Income: Indicating solid earnings quality, scores 1. 2. Liquidity: - Slightly Lower Leverage: Indicates better debt management, scores 1. - Increasing but Low Current Ratio: Improved from 2022 but still below industry median, scores 1. - Increasing Shares: Minor dilution, scores 0. 3. Operating Efficiency: - Rising Gross Margin: Improved efficiency in 2023, scores 1. - Higher Asset Turnover: Better utilization of assets in 2023, scores 1.

Insights for Value Investors Seeking Stable Income

Alstom's Piotroski score of 7 suggests it has a solid financial foundation but some issues need attention. Operational cash flow and asset efficiency are improving, but net income volatility, low current ratio, and minor share dilution are concerns. As an investor, this stock holds potential, especially if Alstom continues to manage its debt and improve profitability and liquidity. It's worth considering for diversification in a portfolio, but caution is advised due to historical earnings volatility.

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

Profitability of Alstom (AOMD.DE)

Company has a positive net income?

The criterion checks if Net Income for the year 2023 is positive or negative. Positive Net Income indicates profitability, contributing a score of 1, while negative Net Income indicates a loss, contributing a score of 0.

For the year 2023, Alstom reported a Net Income of -€132 million. Hence, the Net Income is negative, resulting in a score of 0 for this criterion. Historical data reveals that Alstom has experienced significant variability in net income over the past 20 years. Key highlights include a considerably high Net Income of €3.001 billion in 2016. Conversely, multiple years presented challenges, notably 2021 with a loss of -€581 million and 2015 with a loss of -€719 million as well. The erratic nature of these earnings underscores the operational volatility inherent in Alstom's business environment, warranting a cautious investment perspective.

Company has a positive cash flow?

Cash Flow from Operations (CFO) refers to the cash generated or expended in the core business activities of a company.

For Alstom (AOMD.DE), the CFO in 2023 stands at €606 million, indicating a positive cash inflow from operational activities. This marks a substantial reversal from the negative CFO recorded in 2022 (-€577 million) and 2021 (-€455 million). Over the last 20 years, Alstom has experienced significant volatility in its operational cash flows, with notable highs such as €2,092 million in 2008 and lows including -€2,158 million in 2016. Positive CFO in 2023 earns Alstom one point in the Piotroski score, highlighting improved operational efficiency and potential for sustainable profitability.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) evaluates the trend in profitability by comparing an entity's net income to its total assets over time. ROA measures the effectiveness of asset utilization in generating earnings.

In 2022, Alstom recorded a ROA of -0.0197, which improved to -0.0043 in 2023. This indicates a positive trend despite still being negative in absolute terms. This change reflects a notable improvement and demonstrates Alstom’s strides toward better asset utilization to generate earnings, thereby meeting the Piotroski criterion and earning 1 point. It is also essential to note that over the past 20 years, the industry median ROA has generally been positive, consistently reflecting better asset utilization in comparison to Alstom. This discrepancy signifies that while Alstom is improving, it remains behind industry benchmarks and should continue focusing on enhancing its operational efficiency.

Operating Cashflow are higher than Netincome?

The criterion evaluates whether the company generates more cash from its operations than it records as net income. This is crucial for measuring the quality of earnings.

In 2023, Alstom's operating cash flow stands at €606 million, while its net income is negative at -€132 million. This scenario indicates that Alstom is generating more cash from its core operations than what is reflected in its earnings, which is a positive indicator. A high operating cash flow relative to net income can suggest the company has robust operational efficiency and earnings quality. Over the past 20 years, Alstom's operating cash flow has shown fluctuations, with significant peaks and troughs, while net income has similarly varied, even turning negative multiple times. Thus, for 2023, we add 1 point to Alstom's Piotroski score based on this criterion.

Liquidity of Alstom (AOMD.DE)

Leverage is declining?

Change in leverage is crucial as it gives insight into the company's debt management and financial health.

For Alstom (AOMD.DE), the leverage has slightly decreased from 0.1058 in 2022 to 0.1006 in 2023, which is a positive indication of better debt management and financial stability. Over the last 20 years, the leverage has shown significant fluctuations, peaking at 0.2942 in 2004 and dropping to as low as 0.0066 in 2019. This slight decrease indicates prudent financial practices, thus warranting an additional point in the Piotroski score.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term obligations with its short-term assets.

For Alstom (AOMD.DE), the Current Ratio increased from 0.8027 in 2022 to 0.8247 in 2023. This increment might suggest a slightly more robust liquidity position, which is positive for the Piotroski F-Score, giving it 1 point for this criterion. Historically, the company's current ratio had significant fluctuations, from a high of 1.3105 in 2018 to a low of 0.7443 in 2021. Furthermore, despite the positive trend, it's important to note that both figures in recent years fall below the industry median of 1.197 in 2023, indicating that the company still needs to improve its liquidity compared to its peers to align with the industry's average standards.

Number of shares not diluted?

Change in Shares Outstanding reflects the change in the amount of stock a company has issued. This is critical as increasing shares indicate dilution of shareholder value while a decrease suggests the opposite.

The Outstanding Shares for Alstom increased from 372,724,670 in 2022 to 375,523,158 in 2023. This represents an approximate increase of 0.75%, negatively impacting the Piotroski score as it indicates potential dilution. Over 20 years, Alstom's shares have fluctuated significantly, peaking in 2005 at 932,860,980 and seeing other notable increases and decreases.

Operating of Alstom (AOMD.DE)

Cross Margin is growing?

The change in Gross Margin is crucial as it indicates the efficiency with which a company is producing its goods. An increasing Gross Margin suggests that the company is becoming more profitable.

In 2023, Alstom's Gross Margin was 0.1191 compared to 0.1115 in 2022. This represents an increase in gross margin, which signifies improved efficiency and profitability. Though the increase may seem small, it reflects positively on Alstom's operational performance. Compared to the industry's median gross margin, which is far higher at 0.3176 in 2023, Alstom still trails significantly. This disparity calls for a critical examination of Alstom's strategies in cost management and pricing. However, based on the trend alone, Alstom earns 1 point for this criterion as the Gross Margin has improved.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate revenue. An increase suggests better asset efficiency.

The Asset Turnover for Alstom increased from 0.5237 in 2022 to 0.5332 in 2023, suggesting improved efficiency in using assets to generate revenue. Historically, the Asset Turnover ratio shows significant fluctuation. In the past two decades, 2008 marked the highest ratio at 0.823, reflecting superior efficiency compared to recent years. Generally, a rising trend in this ratio is favourable, so for 2023, this criterion results in a score of 1 point, highlighting a positive shift in asset utilization.