Last update on 2024-06-07

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

Detailed analysis of CEVA (CEVA) using the Piotroski F-Score for 2023, achieving a final score of 6 out of 9. Learn about profitability, liquidity, and more.

Short Analysis - Piotroski Score: 6

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

The Piotroski F-Score measures a company's financial health from 0 to 9 based on nine factors involving profitability, liquidity, and efficiency. CEVA's score is 6 for 2023, indicating moderate financial health. The company has faced profitability issues with negative net income and cash flow from operations but did show improvement in return on assets and had operating cash flow higher than net income. CEVA showed a favorable decline in leverage and an increase in its current ratio, suggesting improved financial stability. There was also no dilution of shares, which is good. However, the asset turnover ratio has declined, showing inefficiency in using its assets to generate revenue, though the gross margin has improved slightly.

Insights for Value Investors Seeking Stable Income

Despite some positive signs like reduced leverage, improved current ratio, and consistent gross margin, CEVA's ongoing profitability challenges and declining asset efficiency make it a riskier investment. If you are a conservative investor, you may want to look for opportunities in more financially stable companies. However, if you have a higher risk tolerance and believe in the company's potential for operational recovery, it might be worth keeping an eye on.

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

Profitability of CEVA (CEVA)

Company has a positive net income?

Net income is crucial as it signifies a company's profitability. A positive net income usually indicates a profitable company.

The net income for CEVA in 2023 is -$11,878,000. This is negative, thus earning 0 points for this criterion. Historically, CEVA has displayed significant fluctuations in net income, peaking at $18,562,000 in 2011 and dipping as low as -$23,183,000 in 2022. The consistency in negative net income in recent years (2022 and 2023) indicates ongoing profitability challenges, posing a worrisome trend for stakeholders.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a critical metric that reveals the cash a company generates from its regular business activities. A positive CFO indicates healthy cash flow management and operational efficacy.

In 2023, CEVA's CFO stands at -6,331,000, indicating a negative cash flow from operations. This pattern has been erratic over the last 20 years, with unsteady years like 2004 (-29,759,000) and 2008 (-3,428,000) counteracted by high points such as 2007 (28,233,000) and 2021 (25,804,000). Given this historical volatility, the negative CFO for 2023 is concerning but not unprecedented. The trend underscores the company’s cyclical challenges in maintaining consistent operational cash flow. Thus, CEVA scores 0 points for this Piotroski criterion in 2023.

Return on Assets (ROA) are growing?

The Piotroski score adds points for positive changes in Return on Assets (ROA).

CEVA’s ROA in 2023 is -0.0388 compared to -0.0728 in 2022, indicating an improvement. Therefore, a point is added for this criterion. Yet, these figures are far below the industry's median ROA of 0.4919 in 2023, implying CEVA's underperformance relative to its peers. While the improvement is a positive sign, the substantial gap compared to industry standards reveals ongoing profitability challenges. Thus, while a point is added, the broader context remains so poor that further analysis is necessary to determine if this ROA trend is sustainable.

Operating Cashflow are higher than Netincome?

This criterion evaluates if the company's operating cash flow exceeds its net income. It suggests higher quality of earnings when operating cash flow is higher, indicating that income is being generated in cash rather than just accounting profits.

For CEVA in 2023, the operating cash flow of -$6,331,000 is indeed higher than the net income of -$11,878,000. This scenario earns CEVA a point because it indicates that, despite negative earnings, the company is still generating cash flow from its operations albeit negative. This trend can be seen as relatively better compared to net income because it's closer to breaking even. Over the last 20 years, the accruals for CEVA have shown periods where operating cash flow was sporadically positive and improved over net income in several years. This reflects capacity for operational recovery even if overall profitability remains a challenge.

Liquidity of CEVA (CEVA)

Leverage is declining?

Change in leverage indicates a company's financial structure and financial risk. Lower leverage ratio implies lower financial risk.

The leverage ratio for CEVA decreased from 0.0169 in 2022 to 0.013 in 2023. This means the firm's leverage has decreased in 2023, indicating a reduction in financial risk for the company. This trend is favorable, as it signifies that CEVA's dependency on debt has lessened, providing them greater flexibility and less obligation on interest payments, making it a financially healthier enterprise.

Current Ratio is growing?

The Piotroski F-Score includes an evaluation of a company's liquidity through the current ratio, which measures a company's ability to pay off its short-term liabilities with its short-term assets. A higher current ratio indicates better liquidity. This is critical in assessing short-term financial health.

In 2023, CEVA's current ratio rose to 7.7871 from 5.3376 in 2022. This signifies a stronger liquidity position compared to the previous year. Historically, CEVA's current ratio has often been considerably higher than the industry median. Over the past 20 years, CEVA's current ratio peaked at 11.8208 in 2011 and hit a low of 3.992 in 2003. Meanwhile, the industry median mostly ranged between 2.5473 and 3.9393 during the same period. The rise in the current ratio suggests improved short-term financial health for CEVA, warranting an addition of 1 point for this criterion. This trend bodes well for CEVA's financial stability, reinforcing a better liquidity position relative to the industry.

Number of shares not diluted?

Change in shares outstanding refers to the difference in the number of shares a company has issued, either through issuing new shares or buybacks. This metric is important as it can affect earnings per share (EPS) and investor ownership dilution.

The data shows a stark increase in outstanding shares for CEVA from 23,172,000 in 2022 to 0 in 2023. This indicates a decrease in shares from 2022 to 2023, which is a significant decrease and would typically be seen as a positive sign regarding investor dilution.This change would warrant setting the Piotroski score point for this criterion to 1.

Operating of CEVA (CEVA)

Cross Margin is growing?

Gross Margin measures the percentage of revenue remaining after deducting the cost of goods sold. A higher Gross Margin indicates better efficiency.

In 2023, CEVA reported a Gross Margin of 0.8804, compared to 0.8745 in 2022. This signifies a positive trend as the Gross Margin has increased year-over-year. Over the past 20 years, CEVA has generally maintained a strong Gross Margin above 0.8355, peaking at 0.9409. Notably, the current Gross Margin of CEVA is substantially higher than the Industry Median Gross Margin of 0.4919 for the same period. Consequently, CEVA earns 1 point for this criterion, highlighting continued efficiency and a competitive advantage over industry peers. This improvement suggests robust operational efficiency and cost management, aligning well with shareholders' interests. Therefore, for this criterion, the trend is good.

Asset Turnover Ratio is growing?

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

Comparing CEVA's asset turnover ratio for 2023 (0.3181) with 2022 (0.3785), the ratio decreased. Historically, CEVA has shown fluctuating asset turnover ratios, with a peak of 0.3785 in 2022. The decline in 2023 suggests the company was less effective in utilizing its assets for revenue generation, warranting a score of 0 for this Piotroski criterion.