Last update on 2024-06-05

Carrier Global (CARR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Carrier Global (CARR) - Piotroski F-Score of 6/9 for 2023. Insights on company's profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 6

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

Carrier Global (CARR) scored a 6 out of 9 using the Piotroski F-Score, which examines profitability, liquidity, and efficiency. Strengths include positive net income ($1.349 billion) and operational cash flow ($2.607 billion) in 2023. The company also shows good ability to convert income to cash, maintain liquidity, and reduce share dilution. However, weaknesses were noted in declining ROA, increasing leverage, and decreasing asset turnover ratio, where improvement is needed in profitability from assets, debt levels, and operational efficiency.

Insights for Value Investors Seeking Stable Income

Carrier Global (CARR) appears to be a strong investment candidate based on the current financing data with a F-Score of 6. The positive cash flow and net income display good profitability and financial health. Despite some areas of concern like rising leverage and decreasing ROA, the positives seem to outweigh the negatives. However, interested investors should keep an eye on debt levels and efficiency in asset use moving forward.

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

Profitability of Carrier Global (CARR)

Company has a positive net income?

Net income is a company's total earnings, reflecting profitability after all expenses have been deducted. A positive net income indicates financial health and operational efficiency.

In 2023, Carrier Global (CARR) reported a net income of $1,349,000,000, which is positive. This signifies solid profitability. Despite a decline from the previous years where the net income was higher—reaching $3,534,000,000 in 2022—the company maintains a streak of positive net income for the last seven years. Thus, Carrier Global scores a point for positive net income in 2023, reflecting its sustained profitable operations. This positive trend positively affects stakeholders' confidence and the company's overall financial robustness.

Company has a positive cash flow?

This criterion examines whether a company generates positive cash flow from its operations. Positive CFO means the company is effectively turning sales into actual cash, showing good financial health.

In 2023, Carrier Global (CARR) posted a Cash Flow from Operations (CFO) of $2.607 billion, which is positive. Adding this to the long-term perspective from the given historical data, CARR has shown an impressive recovery and growth in its operational cash flow. With 2017 to 2022 data reflecting varied CFO between $1.692 billion and $2.237 billion, the surge to $2.607 billion in 2023 marks a notable uptrend. The positive CFO indicates effective cash generation from core activities, underscoring robust operational performance, and thus earns 1 point in the Piotroski analysis.

Return on Assets (ROA) are growing?

ROA, or Return on Assets, measures how efficiently a company can manage its assets to produce profits. A higher ROA indicates better asset efficiency.

For Carrier Global (CARR), the ROA has decreased from 0.1353 in 2022 to 0.0458 in 2023. This decline indicates a reduction in profitability derived from assets. Given the example years and industry medians, we see the industry median ROA tends to be around the 0.3 range, peaking at 0.3242 in 2023. Carrier Global's recent underperformance against its own historical trend and industry benchmark indicates a downturn in asset efficiency, marking this ROA trend as concerning.

Operating Cashflow are higher than Netincome?

This criterion compares operating cash flow with net income, signaling the company's effective cash management.

For the fiscal year 2023, Carrier Global (CARR) reported an operating cash flow of $2.607 billion, which is significantly higher than its net income of $1.349 billion. This results in a favorable Piotroski score, adding one point to the analysis. Such a positive discrepancy suggests that the company is effective in converting its income into cash, which is a strong indicator of robust financial health. Over the last six years, Carrier Global has displayed consistent operational cash flows peaking in 2023, while net income has witnessed fluctuations, notably peaking in 2022 at $3.534 billion before declining in 2023. This trend reinforces the company's ability to generate substantial cash flow, outweighing the volatility in net income, which is immensely favorable for long-term financial stability.

Liquidity of Carrier Global (CARR)

Leverage is declining?

Leverage measures a company's debt levels relative to its equity and is crucial for assessing financial risk.

In 2023, Carrier Global's leverage increased to 0.4458 from 0.3539 in 2022, indicating a higher debt level relative to equity. Over the past seven years, the company's leverage has generally shown an upward trend, peaking in recent years. The increase in leverage from 2022 to 2023 suggests a rise in financial risk, potentially affecting the company's financial flexibility and cost of capital. Therefore, no point is awarded for this criterion as higher leverage can imply increased financial vulnerability.

Current Ratio is growing?

The criterion examines the year-on-year change in the current ratio, a liquidity measure indicating a company's ability to pay short-term obligations with its short-term assets.

Carrier Global (CARR) has demonstrated a positive change in its current ratio, increasing from 1.6378 in 2022 to 2.7253 in 2023. This surge implies improved liquidity, enhancing the company's capacity to cover its short-term liabilities with short-term assets. Historically, CARR's current ratio shifted annually, indicating varied financial health: 1.4118 in 2017, 1.3679 in 2018, 1.3334 in 2019, 1.6681 in 2020, 1.7213 in 2021, and 1.6378 in 2022. Additionally, in 2023, it surpasses the industry median of 2.1975, underscoring superior liquidity management relative to peers. This positive trend is beneficial in meeting financial commitments.

Number of shares not diluted?

Change in shares outstanding evaluates whether the company is diluting or consolidating its shares.

Comparing the outstanding shares of 843,400,000 in 2022 with 837,300,000 in 2023, there is a decrease in the number of shares. This decrease amounts to 6,100,000 fewer shares outstanding, signaling a slight consolidation. Looking over the last 20 years, Outstanding Shares were: - 2017: 872,800,000 - 2018: 872,800,000 - 2019: 866,223,435 - 2020: 866,500,000 - 2021: 867,700,000 - 2022: 843,400,000 - 2023: 837,300,000 This trend shows a notable reduction since 2017, illustrating that Carrier Global is progressively consolidating its shares, adding 1 point for this criterion. This trend can be seen as positive because it may enhance shareholder value by reducing share dilution and potentially indicates strong financial health and management confidence.

Operating of Carrier Global (CARR)

Cross Margin is growing?

The change in gross margin measures the percentage difference between the revenue after subtracting the cost of goods sold, over two different periods, indicating the company's profitability trends.

Carrier Global (CARR) experienced an increase in its gross margin from 0.2676 in 2022 to 0.2888 in 2023. This uptrend is positive, signifying improved operational efficiency and cost management. Moreover, the company's gross margin in 2023, at 0.2888, is competitive compared to the industry median of 0.3242. Despite a rising gross margin, there's potential for further improvement as it still trails the industry median.

Asset Turnover Ratio is growing?

The criterion requires comparing the company's current asset turnover with its previous year's asset turnover to evaluate its operational efficiency.

In fiscal year 2023, Carrier Global's asset turnover declined to 0.7503 from 0.7815 in 2022. This decline signifies a reduction in how efficiently the company used its assets to generate sales. A lower asset turnover ratio means the firm generated fewer sales per dollar of assets in 2023 compared to 2022. Historically, the asset turnover ratio has shown variability, peaking most recently in 2021 at 0.8042 but following a downward trend since 2018’s high of 1.7403. The trend indicates that the operational efficiency of managing assets with respect to revenue generation has been more volatile over the recent five-year period, thus making it critical for the company to focus on improving asset utilization. As a result, we assign 0 points for the asset turnover based on Piotroski criteria.