Last update on 2024-06-06

Bunge (BG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Bunge's (BG) Piotroski F-Score of 6/9 for 2023 reflecting its financial position based on profitability, liquidity, and leverage. Discover investment insights.

Short Analysis - Piotroski Score: 6

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

The Piotroski F-Score for Bunge (BG) is 6 out of 9, indicating a moderately strong financial position. The score is based on its profitability, liquidity, and operating efficiency. For 2023, Bunge has demonstrated favorable conditions such as positive net income and cash flow, improved Return on Assets (ROA), and a higher current ratio. However, concerns include an increase in leverage, dilution of shares, and a decline in asset turnover.

Insights for Value Investors Seeking Stable Income

Given Bunge's Piotroski F-Score of 6 out of 9, it shows signs of financial strength with areas needing improvement. If you are an investor looking for companies with solid profitability and improving liquidity, Bunge could be worth considering despite some concerns in leverage and asset turnover. Further scrutiny of their financial strategies and market conditions is recommended before making any 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 Bunge (BG)

Company has a positive net income?

Net income is a critical indicator of a company's profitability, reflecting the company's total earnings after all expenses and taxes have been deducted from revenues.

Bunge's net income for 2023 stands at $2,243,000,000, indicating a positive figure. Historically, examining Bunge's net income over the past 20 years reveals periods of fluctuation. Notably, in 2019, the company experienced a net income of $-1,280,000,000, marking a significant negative trend. However, recent years have shown a positive trajectory, with net incomes of $1,145,000,000 in 2020, $2,078,000,000 in 2021, and $1,610,000,000 in 2022, culminating in the robust figure for 2023. This positive net income for 2023 adds 1 point in the Piotroski analysis score, reflecting a favorable profitability metric for the company.

Company has a positive cash flow?

Evaluate if Bunge's Cash Flow from Operations (CFO) is positive or negative. This helps assess the firm's ability to generate sufficient cash flow for operations.

For 2023, Bunge reported a Cash Flow from Operations (CFO) of $3,308 million, which is clearly positive. This reflects well on the company's operational efficiency and its ability to generate cash flow internally. When analyzed in the context of historical CFO values over the past 20 years, there have been several instances of negative CFO figures—such as in 2018 (-$1,264 million), 2021 (-$2,894 million), and 2022 (-$5,549 million). Given this past performance, the positive value in 2023 stands out as a significant improvement. Thus, Bunge earns 1 point for this criterion.

Return on Assets (ROA) are growing?

Return on Assets (ROA) is a profitability ratio that indicates how well a company uses its assets to generate profits. An increasing ROA suggests improving efficiency and profitability.

In 2023, Bunge's ROA increased to 0.0898 from 0.0665 in 2022. This is a significant improvement, indicating that Bunge has improved its efficiency in utilizing its assets to generate profit. Adding one point to the Piotroski Score for this increasing ROA is justified. For a broader context, consider Bunge's fluctuated operating cash flows over the past 20 years, peaking at around -$3.5 billion in 2020, and thus at $3.308 billion in 2023. A meaningful comparison includes the industry's median ROA stretching steadily between 0.1675 and 0.2353 over decades. While Bunge's ROA (0.0898) in 2023 remains below the industry's 0.1674, this upward trend is nonetheless a positive indicator.

Operating Cashflow are higher than Netincome?

This criterion compares the company's operating cash flow with its net income and awards a point if the operating cash flow is higher. This is important because it indicates the quality of earnings and the company's ability to generate cash from its core operations.

For 2023, Bunge (BG) recorded an operating cash flow (OCF) of $3,308 million, while the net income stood at $2,243 million. Given that OCF is significantly higher than net income, Bunge earns a point under this criterion. This positive discrepancy suggests that Bunge is efficient in turning its net earnings into cash flow, reflecting robust operational efficiency. Looking at the historical data, Bunge's OCF has been quite volatile over the years, swinging into negative territory multiple times. However, in recent years, the firm has managed to stabilize its cash flow, reaching an impressive $3,308 million in 2023. Conversely, net income trends also exhibit volatility but to a lesser degree, stabilizing in 2023. Overall, the trend seems favorable for Bunge, enhancing its financial flexibility and indicating sound cash flow management capabilities.

Liquidity of Bunge (BG)

Leverage is declining?

The change in leverage measures the company's ability to manage its debt relative to its equity. A decrease in leverage indicates improved financial health.

In 2023, Bunge (BG) saw an increase in its leverage ratio to 0.1831 compared to 0.1548 in 2022. This represents a rise from the previous year, which is not ideal as it suggests increased debt levels relative to equity. Historically, Bunge's leverage has seen fluctuations but in 2023, the leverage increased, which implies a worsening financial positioning regarding its debt management. Hence, for this criterion, Bunge scores 0 points.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay its short-term obligations with its short-term assets. A higher current ratio indicates better liquidity, and a ratio above 1 suggests the company can cover its short-term liabilities.

For Bunge (BG), the current ratio increased from 1.7456 in 2022 to 2.127 in 2023, signaling a positive trend in liquidity. This 21.8% increase demonstrates that Bunge is in a stronger position to manage its short-term obligations, thereby reducing financial risk and adding stability to its operations. This improvement earns Bunge one point according to the Piotroski score criteria. Moreover, when compared to the industry median current ratio of 2.1167 in 2023, which saw only a nominal increase from 1.8512 in 2022, Bunge's effort to improve its liquidity appears more robust. Historical data also shows that Bunge’s current ratio has consistently been close to the industry median, emphasizing its competitive position in terms of liquidity over the years.

Number of shares not diluted?

The change in shares outstanding measures the dilution effect and how shareholder equity metrics might be affected.

The Outstanding Shares for Bunge (BG) increased slightly from 148,712,251 in 2022 to 148,804,387 in 2023. Hence, according to the Piotroski system, we would set this score to 0 as there is an increase rather than a decrease in shares. Historically, the outstanding shares data over the last 20 years shows fluctuations, hitting a peak of over 156 million in 2010 and then showing various trends of increments and decrements, reflective of corporate actions, including stock buybacks and issuances. Specifically, periods from 2014 to 2020 display a more stabilized range oscillating around 140-152 million, indicating controlled and relatively stable dilution effects in recent years. This particular increase from 2022 to 2023, although minimal, is important to consider as it can have implications on earnings per share and voting power.

Operating of Bunge (BG)

Cross Margin is growing?

Change in Gross Margin indicates the improvement in the company's core profitability from its production operations. An increasing trend suggests better management efficiency or higher pricing power.

Bunge (BG) has shown an improvement in its gross margin, rising from 0.0548 in 2022 to 0.0814 in 2023. This increase points to enhanced operational efficiencies or better cost control, contributing positively to the company’s profitability, receiving 1 point in the Piotroski analysis. Although still lower than the industry median of 0.1674, this marks a significant improvement for the company itself and highlights solid progress from its historical lows like 0.0132 in 2019.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate revenue. A higher ratio indicates better performance.

In 2023, Bunge's Asset Turnover decreased to 2.3839 from 2.7782 in 2022. The decrease suggests a decline in operational efficiency. Consequently, no points are awarded for this criterion. Over the past 20 years, the trend has shown fluctuations with recent years evidencing an overall positive progression, yet the dip in 2023 indicates potential concerns that need to be addressed by management.