Last update on 2024-06-07

Biogen (BIIB) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze Biogen's financial strength in 2023 with a Piotroski F-Score of 5/9, reflecting mixed performance in profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 5

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

Biogen (BIIB) was assessed using the Piotroski F-Score to determine its financial strength based on 9 criteria related to profitability, liquidity, and operational efficiency. The company earned a Piotroski score of 5 out of 9, which represents an average financial health. Key positive points include a positive net income, positive cash flows from operations, and a higher operating cash flow compared to net income. Biogen has also decreased its number of shares outstanding, which can be favorable for investors. However, negative points were awarded for a decline in return on assets, a small increase in leverage ratio, a decreased current ratio, a decrease in gross margin, and a reduced asset turnover ratio. Overall, these factors indicate a mixed financial performance for Biogen.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, Biogen shows an average financial position. While there are positive indicators such as consistent profitability, healthy operating cash flow, and favorable share count reduction, there are also concerns like declining asset efficiency, increased leverage, and reduced liquidity. This balanced score suggests that potential investors might need to consider further detailed analysis and monitor the company's future performance before making investment decisions. It may be worth looking into for risk-tolerant investors but could be less appealing for conservative investors seeking stronger financial metrics.

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

Profitability of Biogen (BIIB)

Company has a positive net income?

Net income represents the company's total earnings, reflecting its profitability. A positive net income is a sign of financial health and a company's ability to generate profit for its shareholders.

For the year 2023, Biogen reported a net income of $1,161,100,000. This value is positive, indicating that the company was profitable during the year. Over the past two decades, Biogen's net income has shown variability, with notable fluctuations. The company experienced significant positive growth, particularly from 2008 to 2019, where net income increased from $970.132 million to a record $5.8885 billion in 2019. This trend reflects strong historical performance despite recent declines in profitability. Nevertheless, the positive net income in 2023 earns Biogen 1 point in the Piotroski score, demonstrating its continued ability to generate profit.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is crucial as it shows how much cash a company generates from its core business operations.

For Biogen (BIIB), the CFO in 2023 is $1,547,200,000, which is positive. This is a healthy indicator as positive CFO suggests that the company is generating adequate cash to meet its operating expenses and invest in future growth. Historical data reveals that Biogen has consistently shown positive CFO over the last 20 years, which signifies strong operational efficiency and solid cash management. Specifically, although there were some fluctuations, the CFO generally showed an increasing trend over time.

Return on Assets (ROA) are growing?

Change in ROA is a key indicator of a company's efficiency in converting its investments into profit. A higher ROA suggests better management and utilization of assets.

Biogen's ROA decreased from 0.1258 in 2022 to 0.0452 in 2023, signaling a decline in asset efficiency. This trend is unfavorable for investors, as it illustrates a significant drop in profitability. Given the industry median ROA values in 2023 of 0.7176, Biogen's considerably lower ROA may raise concerns about its competitive positioning.

Operating Cashflow are higher than Netincome?

This criterion compares if the Operating Cash Flow is higher than Net Income. Superior operating cash flow indicates better quality earnings and low earnings manipulation.

In 2023, Biogen's Operating Cash Flow was $1.547 billion, while its Net Income was $1.161 billion. Since the Operating Cash Flow is notably higher than Net Income, this suggests that Biogen's earnings are of high quality and not significantly influenced by accounting adjustments or earnings manipulation schemes. This adherence to high-quality earnings can instill confidence among investors and stakeholders, making it a positive observation. Over the past 20 years, the Operating Cash Flow demonstrated steady growth, indicating consistent operational efficiency. Hence, we add 1 point for this criterion.

Liquidity of Biogen (BIIB)

Leverage is declining?

Leverage evaluates the degree to which a company is using borrowed money. Monitoring changes in leverage is essential to understand the company’s financial stability.

For Biogen (BIIB), the leverage ratio slightly increased from 0.2694 in 2022 to 0.2678 in 2023, indicating that the company relied marginally more on borrowing. Given that the criteria for the Piotroski score is to add a point if leverage decreases, and in this case, it did not, we assign 0 points here. Although this change is minimal, a consistently rising leverage trend over the past decades—spiking above 0.3 in 2015 and remaining relatively high—suggests that Biogen is increasingly reliant on debt. This could signal potential risks if the economic environment worsens or if interest rates rise significantly.

Current Ratio is growing?

Change in Current Ratio assesses the company's ability to pay short-term obligations with its short-term assets. A high current ratio indicates a better liquidity position.

The Current Ratio for Biogen (BIIB) has decreased from 2.9917 in 2022 to 1.9973 in 2023. This represents a decline, indicating a weakening in the company's short-term liquidity position. Since the Current Ratio has not increased, it does not earn a point based on the Piotroski analysis criteria. Historically, Biogen's Current Ratio has been above the industry median, maintaining relatively strong liquidity. However, the downward trend in 2023 is concerning and suggests the company might be using its assets less efficiently compared to previous years.

Number of shares not diluted?

Change in shares outstanding indicates whether a company is issuing new shares or buying back its own shares, impacting shareholder value.

The outstanding shares for Biogen decreased from 145,300,000 in 2022 to 144,700,000 in 2023. Biogen has been consistent in decreasing its share count since 2003, when it had 177,982,000 shares outstanding. This reduction in shares is considered favorable for shareholders as it often indicates that the company believes its own stock is undervalued or used excess capital to buy back shares, thereby potentially increasing the value of remaining shares. Given this, we add 1 point for the decrease in shares outstanding.

Operating of Biogen (BIIB)

Cross Margin is growing?

The change in gross margin helps to understand the company's ability to generate profit from sales before deducting overhead costs. An increasing gross margin is a positive indicator, reflecting higher efficiency and profitability.

Biogen's gross margin decreased from 0.7761 in 2022 to 0.7424 in 2023. This negative trend is notable because it indicates a decline in profitability and efficiency concerning production costs. Over the last 20 years, Biogen's highest gross margin was 0.9151 in 2010, while the industry median ranged from around 0.7483 to 0.7176 over the same period. The declining trend in recent years demonstrates increasing challenges and competitive pressure within the industry. Notably, 2023's gross margin of 0.7424 remains very close to the industry median of 0.7176 for that year, suggesting Biogen's performance is comparable to its peers despite the recent decrease. This finding points to operational inefficiencies or cost management issues Biogen must address to regain its previous profitability levels. Therefore, Biogen scores 0 points under this criterion.

Asset Turnover Ratio is growing?

Asset Turnover represents how efficiently a company uses its assets to generate sales; higher ratios indicate better performance.

The Asset Turnover for Biogen (BIIB) decreased from 0.4201 in 2022 to 0.3827 in 2023. This indicates a less efficient use of assets in generating sales, resulting in a 0-point score for this criterion. Over the past 20 years, Asset Turnover has fluctuated but overall portrays an inconsistent performance in asset utilization.