Last update on 2024-06-05

Celanese (CE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Celanese (CE) scored 3/9 in the 2023 Piotroski F-Score, reflecting aspects of profitability, liquidity, and leverage. A detailed analysis reveals insights into CE's financial health.

Short Analysis - Piotroski Score: 3

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

The Piotroski F-Score is a financial measurement score between 0 to 9 to determine the strength of a company's financial health. Celanese (CE) was assessed using the Piotroski 9-criteria system. Here's a brief analysis based on its results: 1. **Profitability**: Celanese has a positive net income and maintains strong operational cash flow. However, its Return on Assets (ROA) is declining, and its Operating Cash Flow is lower than its Net Income. 2. **Liquidity**: The company’s leverage is decreasing, but it shows a slightly declining current ratio indicating mixed signals about its short-term financial health. There's been a slight increase in outstanding shares, suggesting potential dilution. 3. **Operating Efficiency**: Gross Margin and Asset Turnover Ratio have both decreased, indicating lower operational efficiency. Overall, Celanese scored a 3 on the Piotroski scale, which suggests they may not be in the strongest financial position right now.

Insights for Value Investors Seeking Stable Income

Based on the detailed analysis, Celanese (CE) has a low Piotroski F-Score of 3, which implies a weak financial standing according to the Piotroski criteria. For potential investors, this means that it might not be the best candidate for investment at this time. While there are some positives like consistent positive net income and operational cash flow, there are concerns over the ROA decline, current ratio drop, and operating efficiencies. It might be worth watching for improvements or looking at stronger options for investment.

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

Profitability of Celanese (CE)

Company has a positive net income?

Net income is the total profit of a company after subtracting all expenses, taxes, and costs. Positive net income indicates profitability.

The net income for Celanese in 2023 is $1,960,000,000, which is indeed positive. Therefore, this criterion adds 1 point as per Piotroski rules. This trend is particularly favorable; the company has maintained a positive net income for many years, signifying solid and consistent profitability. Over the last 20 years, it has only reported a negative net income once in 2004. This demonstrates strong financial performance and management, especially given that recent years have seen net income figures consistently well above $1 billion.

Company has a positive cash flow?

Analyzing Cash Flow from Operations (CFO) helps investors understand a company's liquidity and ability to generate cash from its core operations, which is a sign of financial health.

Celanese (CE) reported a positive Cash Flow from Operations (CFO) of $1,899,000,000 in 2023, resulting in 1 point for this criterion. Evaluating the trend from the past 20 years reveals that CE has consistently managed to generate a positive operating cash flow with one exception in 2004. This upward trajectory, peaking at nearly $1.9 billion in 2023, highlights CE's strong operational efficiency and robust liquidity. The consistent generation of positive cash flow reinforces the company's ability to sustain its operations, invest in growth opportunities, and withstand economic downturns.

Return on Assets (ROA) are growing?

Change in ROA measures the improvement or deterioration in a firm's profitability over time, key for understanding operational efficiency.

Comparing Celanese's ROA of 0.0741 in 2023 with 0.099 in 2022, the ROA actually decreased, indicating a decline in profitability. Thus, this criterion is scored 0. Historically, the industry's median ROA has consistently been higher, with a median of 0.2238 in 2023, further illustrating Celanese's underperformance.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income assesses whether a company is generating sufficient cash from its operations compared to its net income. This can indicate quality of earnings and cash generation ability.

For Celanese (CE) in 2023, the Operating Cash Flow (OCF) is $1,899,000,000, whereas the Net Income (NI) is $1,960,000,000. The OCF is lower than the NI, resulting in no point (0). Over the past two decades, CE’s OCF has generally shown an upwards trend, peaking in recent years, which indicates strong operational performance. However, the net income has often exceeded the cash flow from operations, posing questions about the quality of earnings.

Liquidity of Celanese (CE)

Leverage is declining?

Leverage refers to the amount of debt a company uses to finance its operations, measured as Total Liabilities divided by Total Assets.

Celanese's leverage has decreased from 0.5229 in 2022 to 0.4747 in 2023, showing an improvement in financial stability as debt relative to assets decreased. Historically, leverage has fluctuated, peaking at 0.5229 in 2022 but significantly lower in prior years, as seen in 2021 (0.2819) and 2020 (0.3149). A lower leverage ratio typically indicates a healthier balance sheet, suggesting Celanese is less reliant on debt. Therefore, 1 point should be added in the Piotroski analysis.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with current assets. A higher ratio indicates better short-term financial health.

Despite a slightly decreased Current Ratio of 1.527 in 2023 compared to 1.6251 in 2022, Celanese has shown a consistent ability to maintain a healthy liquidity position. This slight decline by 0.0981 points cannot be ignored and does indicate a minor deterioration. However, it remains above the critical mark of 1, suggesting it can meet its liabilities without immediate concerns. Additionally, comparing this with the industry median in 2023 (1.5873), Celanese falls somewhat short, negating any points for this criterion. Past years, however, have shown stability often comparable to or better than the industry.

Number of shares not diluted?

This criterion assesses whether a company is engaging in shareholder-friendly practices, such as share repurchases, which can indicate management's confidence in the firm's value.

For Celanese (CE), the Outstanding Shares increased from 108,380,082 in 2022 to 108,848,962 in 2023, which represents an increase of 468,880 shares. Consequently, this criterion would score a 0, as the increase in outstanding shares can be indicative of potential dilution, which is often unfavorable for existing shareholders. If we delve deeper into the trend from the last 20 years, the number of outstanding shares has significantly fluctuated, peaking at over 171 million in 2007 and more recently declining to around 108 million over the past years, before this slight increase. This historical context highlights periodic share buybacks and issuances, signaling mixed signals concerning management's long-term strategies and their confidence in the company's intrinsic value.

Operating of Celanese (CE)

Cross Margin is growing?

Gross Margin represents the percentage of total sales revenue that a company retains after incurring the direct costs associated with producing the goods and services it sells. It is crucial as it indicates the financial health and efficiency of the core business operations.

The Gross Margin for Celanese (CE) in 2023 is 0.2379, compared to 0.246 in 2022. This indicates a decrease in Gross Margin. Therefore, under this specific criterion of the Piotroski Score, Celanese earns 0 points since the Gross Margin did not increase in 2023.

Asset Turnover Ratio is growing?

The asset turnover ratio measures the efficiency of a company in using its assets to generate sales. It is one of the metrics in the Piotroski score.

The asset turnover for Celanese (CE) has decreased from 0.5058 in 2022 to 0.4139 in 2023, marking a decline. As a result, no point is added for this criterion. The trend, as examined over the last 20 years, shows fluctuations, peaking at 0.8963 in 2008 and most recently decreasing. This decrease can indicate either lower efficiency in using assets to generate revenue or an increase in total assets without a proportional increase in sales, both potential concerns for investors.