Last update on 2024-06-05

Bio-Rad Laboratories (BIO) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Bio-Rad Laboratories (BIO) 2023 Piotroski F-Score: 6/9. Understand financial health through profitability, liquidity, and operational efficiency metrics.

Short Analysis - Piotroski Score: 6

We're running Bio-Rad Laboratories (BIO) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Bio-Rad Laboratories scored a 6 out of 9 on the Piotroski F-Score, which means it's in a relatively good, but not great, financial position. While the company has positive cash flow from operations and some liquidity strengths like a stable current ratio, its gross margin has declined, and it has negative net income for 2023. There's been better utilization of assets recently, and the company repurchased shares which is good for current shareholders. However, its increased leverage and historical challenges in asset turnover and return on assets suggest some risks.

Insights for Value Investors Seeking Stable Income

Based on this analysis, Bio-Rad Laboratories (BIO) shows some positive signs, like positive cash flows and liquidity improvements, but there are also notable concerns. The company's recent financial challenges, including negative net income and increased leverage, are worth paying attention to. As an investor, it might be reasonable to keep an eye on BIO for potential future improvement but approach with caution until more stable positive trends are observed, especially in profitability and debt management.

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

Profitability of Bio-Rad Laboratories (BIO)

Company has a positive net income?

Net income assesses a company's profitability over a given period, crucial for understanding business viability.

Bio-Rad Laboratories' net income for 2023 stands at -$637.324 million. Historical data shows fluctuation with a peak net income of $4.25 billion in 2021 and a substantial decline in recent years. This negative net income for 2023 results in zero points for this criterion, reflecting financial challenges and potential concerns for investors.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion focuses on whether a company generates positive cash flow from its core business activities.

In 2023, Bio-Rad Laboratories reported a CFO of $374.943 million. This is a positive cash flow, indicating that the company is generating sufficient cash from its core operating activities. This is crucial for meeting obligations, funding further investments, and overall financial health. Historically, over the past 20 years, Bio-Rad has exhibited a consistent trend of positive operating cash flow with minor fluctuations. Notably, the CFO figures have significantly improved from $127.64 million in 2003 to the current $374.943 million in 2023. This stability and growth in CFO underscore a robust operating performance, contributing positively to the Piotroski Score.

Return on Assets (ROA) are growing?

Change in ROA measures the improvement in return on assets, indicating better utilization of company's assets.

For Bio-Rad Laboratories (BIO), the ROA increased from -0.2318 in 2022 to -0.0494 in 2023, earning them 1 point in Piotroski Analysis. Though still negative, this reflects an improvement in asset utilization, suggesting a potential reversal in operational efficiency. Compared to operating cash flows over 20 years and the industry's median return on assets, which averages above 0.60, Bio-Rad's ROA is notably below but the upward trend is a positive signal nonetheless.

Operating Cashflow are higher than Netincome?

This criterion compares the operating cash flow to net income to evaluate a company's earnings quality.

For Bio-Rad Laboratories (BIO) in 2023, the operating cash flow was $374.943 million, while the net income stood at a staggering loss of -$637.324 million. Given that the operating cash flow is substantially higher than the net income, this warrants a point in the Piotroski F-Score model. The $374.943 million in operating cash flow demonstrates the company's strong operational performance, even in the face of significant net losses. Historically, this metric appears robust, with a notable rise to peak values during 2019-2021. Thus, this trend is good as it reflects the company's ability to generate cash through its core activities, mitigating concerns arising from net losses.

Liquidity of Bio-Rad Laboratories (BIO)

Leverage is declining?

Change in Leverage assesses the shift in a company's financial leverage from one period to another.

The Leverage for Bio-Rad Laboratories in 2022 was 0.1001 and it increased to 0.1109 in 2023. This increase in leverage implies that the company is using more debt to finance its operations compared to the previous year. Over the last 20 years, the leverage has shown significant fluctuations, but the current rise suggests higher financial risk; hence, it receives a score of 0 for this criterion. Such an increase might not be promising for stakeholders aiming for a less risky investment.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets. It is an important indicator of financial health.

The current ratio for Bio-Rad Laboratories (BIO) increased from 5.5529 in 2022 to 5.8308 in 2023, earning a point according to the Piotroski criteria. This trend suggests an improvement in the company's ability to meet its short-term liabilities. Over the last 20 years, the current ratio has generally been higher than the industry median, which stood at 4.0615 in 2022 and increased to 4.5668 in 2023. This strong liquidity position relative to the industry norm bodes well for BIO's operational resilience.

Number of shares not diluted?

Change in Shares Outstanding measures whether the company has issued more shares or repurchased them. Reducing shares outstanding is often seen favorably as it can increase the value of existing shares.

Comparing the shares outstanding in 2022 (29,785,000) to shares outstanding in 2023 (29,209,000), we see a decrease. This indicates that Bio-Rad Laboratories repurchased shares, reducing the number of shares outstanding. This action adds 1 point, signaling a good trend. Historically, the company has increased shares outstanding consistently over the last two decades—from 26,310,000 in 2003 to a peak of 30,034,000 in 2017. The reduction in the most recent year is a strategic shift, possibly indicating confidence in their valuation and a return of capital to shareholders. This trend is favorable for existing shareholders as it implies potential value enhancement of their shares and a more disciplined capital allocation policy by the management.

Operating of Bio-Rad Laboratories (BIO)

Cross Margin is growing?

Gross Margin measures the percentage of revenue remaining after deducting the direct costs of producing goods or services. It's crucial as it indicates a company's financial health and efficiency in managing production costs.

For 2023, Bio-Rad Laboratories (BIO) reported a Gross Margin of 0.5342, down from 0.5593 in 2022. This represents a decrease, leading to a score of 0 for this criterion. Analyzing the historical trend over the past 20 years, Bio-Rad's Gross Margins have generally fluctuated, peaking at 0.5681 in 2011. In contrast, the industry median Gross Margin has displayed a positive trend, reaching 0.6463 in 2023. The declining Gross Margin in 2023 reflects negatively on the company's efficiency and cost management compared to both its historical performance and industry peers.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures the efficiency of a company's use of its assets in generating sales revenue. An increasing ratio indicates better performance.

Bio-Rad Laboratories' Asset Turnover increased from 0.1791 in 2022 to 0.2071 in 2023, which adds 1 point. Despite this positive short-term trend, the historical data reveals a significant decline over the last two decades, from 1.1752 in 2003. Thus, while the recent increase is favorable, persistent underperformance remains a concern.