Last update on 2024-06-07

Cumulus Media (CMLS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Comprehensive Piotroski F-Score Analysis of Cumulus Media (CMLS) for 2023, evaluating its profitability, liquidity, and leverage, achieving a score of 3/9.

Short Analysis - Piotroski Score: 3

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

Cumulus Media (CMLS) was evaluated using the Piotroski F-Score, which assesses a company's financial strength on a scale of 0 to 9 based on 9 criteria related to profitability, liquidity, and leverage. In 2023, Cumulus Media scored 3 out of 9 on this scale. Key findings include negative net income, positive cash flow from operations, and a decline in return on assets. The company's leverage increased, and its current ratio decreased, indicating higher financial risk and lower liquidity. However, the company did see a significant reduction in outstanding shares and maintained positive operating cash flow that was higher than its net income. Overall, the scores suggest consistent issues with profitability and efficiency over the years.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski score of 3, Cumulus Media shows signs of financial weakness, particularly in profitability and liquidity. While the company has some positive aspects such as positive cash flow from operations and reduced outstanding shares, the numerous negative indicators—including consistent losses and increasing leverage—suggest that it may be risky for investors seeking stable and strong financial performance. It could be worth monitoring for potential improvements, but it may not be the best candidate for a low-risk investment portfolio at this time.

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

Profitability of Cumulus Media (CMLS)

Company has a positive net income?

A firm's net income is crucial for gauging its profitability and financial health. A positive net income indicates a profitable company while a negative net income suggests losses.

Cumulus Media (CMLS) had a net income of -$117,879,000 in 2023, which is unequivocally negative. This means that based on this criterion of the Piotroski Score, CMLS scores 0 points. The historical data over the last 20 years shows a rather volatile income pattern with numerous instances of negative net incomes, suggesting persistent profitability challenges. For instance, in 2017 and 2018, the net income figures were starkly negative at -$546,494,000 and -$510,720,000 respectively. There were occasional years of profit such as 2019 with $75,758,100, but the overall trend leans towards losses. This trend is concerning as it underlines the company's ongoing struggles to realize stable profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the cash generated or used by a company's regular operating activities. Positive CFO is crucial as it indicates that a company is generating enough cash to sustain and grow its operations.

For the year 2023, Cumulus Media (CMLS) recorded a Cash Flow from Operations (CFO) of $31,661,000, which is positive. This is a good indicator as it shows that the company is generating sufficient cash from its core operations. Over the last 20 years, there has been significant fluctuation in the CFO. Notably, the CFO was at its peak in 2012, hitting $179,490,000, and at its lowest in 2020 with $33,210,000. Despite this variability, maintaining a positive CFO, as seen in 2023, adds 1 point in the Piotroski Analysis and suggests financial stability.

Return on Assets (ROA) are growing?

Change in ROA indicates the company's efficiency in profitable asset use over a period. An increasing ROA signifies better management and profitability.

Cumulus Media's ROA for 2023 stands at -0.0773, a decline from its 2022 ROA of 0.0098. This downward trajectory indicates a worsening in asset profitability. Historically, the company's ROA has fluctuated significantly, with peaks and troughs often deviating substantially from the industry median. For instance, in 2009, the ROA was at a low, paralleling the financial downturn, whereas, in 2012, it surged to 0.4501, approaching the industry median of 0.4501. The recent decrease to -0.0773 starkly contrasts with the 2022 industry median ROA of 0.4958, underscoring significant underperformance. Therefore, for the Piotroski analysis, no point is added for ROA change.

Operating Cashflow are higher than Netincome?

Operating cash flow being higher than net income indicates that the company is generating sufficient cash to sustain operations, which is vital for financial health.

For the fiscal year 2023, Cumulus Media (CMLS) reported an operating cash flow of $31.66 million, which surpasses its net income of -$117.879 million. This criterion scores a point as the positive operating cash flow is a favorable indicator of the company's operational efficiency. The consistency of cash flow from operations over the two decades, with notable highs in years such as 2012 ($179.49 million) and 2010 ($42.738 million), underscores the company's ability to generate liquidity even in challenging times. This trend is a good sign since sustained operational cash flow can support ongoing business activities and investments despite the accumulation of net losses in several fiscal years.

Liquidity of Cumulus Media (CMLS)

Leverage is declining?

Compare the leverage ratios between two consecutive years to assess financial risk.

In 2022, Cumulus Media (CMLS) had a leverage ratio of 0.5186, which increased to 0.5454 in 2023. This increased leverage indicates a rise in the company’s debt relative to its equity, which generally signifies increasing financial risk. Over a 20-year period, CMLS has experienced fluctuations in its leverage, with notable highs in 2008 (1.2669) and 2017 (1.1504). This trend suggests volatility in the company's debt management strategies. In simpler terms, CMLS has added more debt in the latest year, marking an uptick compared to the previous year, translating into an observable increase in financial risk.

Current Ratio is growing?

Current Ratio is an indicator of a company's ability to pay short-term obligations with its short-term assets.

The Current Ratio for Cumulus Media (CMLS) in 2023 has decreased to 1.996 from 2.3712 in 2022. This downward trend marks a 15.85% reduction. It is important as this ratio measures the company's liquidity. Historically, Cumulus Media's Current Ratios have fluctuated with values as low as 0.949 in 2009 and peaking at 10.8864 in 2017. Compared with the industry's median, which stands at 1.5175 in 2023, Cumulus Media remains above average, suggesting somewhat better liquidity. However, this year's decrease warrants a score of 0 in the Piotroski Analysis for this criterion.

Number of shares not diluted?

Change in Shares Outstanding measures the trend of a company's outstanding shares. A decrease often suggests share buybacks, enhancing shareholder value, whereas an increase might indicate dilution.

For Cumulus Media (CMLS), the Outstanding Shares drastically decreased from 19,560,257 in 2022 to 0 in 2023, which is a reduction by 100%. Such a decrease could be due to share buybacks, consolidation, or other corporate actions that reduce the number of shares in the market. In this context, the trend is favorable since it indicates a significant reduction in outstanding shares, although the reason behind the drastic drop to zero warrants further investigation. According to the Piotroski Analyses, since the Outstanding Shares decreased, Cumulus Media gets a score of 1 for this criterion.

Operating of Cumulus Media (CMLS)

Cross Margin is growing?

Change in Gross Margin assesses if the company's ability to generate profit from sales has improved. An improved margin is vital for financial health

In 2023, Cumulus Media’s Gross Margin decreased to 0.6076 from 0.6251 in 2022. This indicates a decline in efficiency at converting revenue into profit. Given this decrease of approximately 2.8%, the criteria for increased Gross Margin earn a score of 0. Historically, Cumulus Media's Gross Margin has fluctuated, with the highest recorded at 0.6608 in 2015. Compared to the industry median, Cumulus Media often lags behind, with the industry median for 2023 at 0.4493, showcasing that while they are above the median, they are still declining.

Asset Turnover Ratio is growing?

Explain the criterion for Cumulus Media (CMLS) and why it is important to consider

Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue. It is important because it provides insights into how well the company is utilizing its assets to produce revenue. Higher ratios are generally favorable, as they indicate a company's assets are generating more revenue.