Last update on 2024-06-07

Cirrus Logic (CRUS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Piotroski F-Score Analysis for Cirrus Logic (CRUS) for 2023. Scores 7/9 for profitability, liquidity, and operating efficiency. Key insights for investors.

Short Analysis - Piotroski Score: 7

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

The Piotroski F-Score assesses a company's financial strength on a scale from 0 to 9 based on profitability, liquidity, and operating efficiency. Cirrus Logic (CRUS) scored 7 out of 9, reflecting solid financial health. The company showed positive net income and cash flow from operations, reduced leverage, an increasing current ratio, and a higher asset turnover ratio. However, there were slight concerns with declining return on assets and gross margins.

Insights for Value Investors Seeking Stable Income

Cirrus Logic (CRUS) appears to be a strong and usually stable company with a score of 7 out of 9. While some areas like return on assets and gross margins have declined, the overall financials are solid, especially in liquidity and operational efficiency. It could be a worthwhile investment to consider, particularly for those seeking companies with good profitability and financial stability. Reviewing detailed financial statements and market conditions before investing is always recommended.

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

Profitability of Cirrus Logic (CRUS)

Company has a positive net income?

Net income determines a company's profitability. Positive net income signifies a profitable period and affirms the company's ability to generate earnings.

For 2023, Cirrus Logic (CRUS) has a net income of $176,703,000, which is positive. With a positive net income in 2023, 1 point is awarded in this criterion. Historically, looking at the company's net income over the last 20 years, there have been fluctuations. The company faced losses in certain years, such as 2003 with a net loss of $199,213,000, but it significantly improved over time with robust growth seen particularly in 2011 onwards. For instance, the net income in 2011 was $203,503,000, reflecting the company's profitability trajectory. Thus, with the solid positive figure in 2023, this indicates a good trend for the net income criterion under Piotroski Analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash a company generates from its regular operating activities and is critical for assessing its financial health.

For 2023, Cirrus Logic (CRUS) reported a Cash Flow from Operations (CFO) of $339,568,000, which is positive. This is a significant improvement compared to some of the negative values observed in prior years, such as -$18,167,000 in 2003 and -$17,103,000 in 2005. Over the last 20 years, CRUS has shown a generally upward trend in CFO with positive values since 2006, demonstrating consistent operational efficiency and financial health. This positive CFO for 2023 adds 1 point to the Piotroski score, reflecting robust internal cash generation capabilities. Overall, this trend bodes well for the firm's ability to sustain and grow its operations without heavy reliance on external funding.

Return on Assets (ROA) are growing?

Change in ROA represents the company's efficiency in generating profit from its assets, indicating operational performance.

Based on the data, Cirrus Logic's ROA decreased from 0.1651 in 2022 to 0.0844 in 2023. This decrease reflects a reduction in the company's efficiency in generating profit from its assets. The declining trend is a signal of operational inefficiency, which is particularly concerning when compared to the industry median ROA, which has remained consistently above 0.42 over the last 20 years. Hence, for this criterion, the score is set to 0.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is a criterion that distinguishes between companies with high earnings quality and those with potentially overstated earnings.

For Cirrus Logic in 2023, the operating cash flow was $339,568,000, while the net income was $176,703,000. This indicates a healthy cash generation capability, which signifies high earnings quality. An operating cash flow higher than net income suggests that the earnings reported by the company are backed by actual cash flows rather than accounting adjustments. This is a positive sign and hence, Cirrus Logic earns 1 point for this criterion.

Liquidity of Cirrus Logic (CRUS)

Leverage is declining?

Change in leverage measures the extent to which a company uses borrowed money. It is crucial as higher leverage means increased risk.

The leverage of Cirrus Logic (CRUS) has decreased from 0.0768 in 2022 to 0.0594 in 2023. This signifies a reduction in the company's reliance on debt, suggesting improved financial stability. Historically, CRUS has maintained relatively low leverage, with noticeable peaks in 2015 (0.1577) and 2016 (0.1357) before stabilizing. This trend is positive, as lower leverage reduces financial risk, warranting an addition of 1 point.

Current Ratio is growing?

The Current Ratio (CR) measures a company's ability to pay off its short-term liabilities with its short-term assets.

Comparing Cirrus Logic's current ratio in 2023 (4.7049) against 2022 (3.1725), there is a notable increase. This rise is advantageous as it indicates an improving liquidity position, further endorsed by its trend over two decades generally exceeding the industry median.

Number of shares not diluted?

Change in shares outstanding gauges the company's financial strategy, affecting investor value and share prices.

Cirrus Logic (CRUS) decreased its outstanding shares from 57,278,000 in 2022 to 55,614,000 in 2023. This reduction of approximately 2.9% translates to a positive indicator under the Piotroski analyses, earning the company 1 point. Historically, Cirrus Logic has had fluctuations but this trend of reducing shares could enhance shareholder value by reducing dilution.

Operating of Cirrus Logic (CRUS)

Cross Margin is growing?

Gross Margin compares a company's sales revenue against its cost of goods sold, and a rising margin indicates improving efficiency.

In 2023, the Gross Margin for Cirrus Logic (CRUS) was 0.5043, whereas in 2022, it was 0.5185. This illustrates a slight decline in the Gross Margin year-over-year. Despite the minute reduction, CRUS's Gross Margin over the past 20 years remains relatively robust, especially when compared to the Industry Median Gross Margin. For instance, the Industry Median Gross Margin for 2023 is 0.4919, lower than that of CRUS. Given the marginal difference and a healthy position relative to industry standards, the declining trend is slightly concerning but not necessarily alarming. Expectedly, a score of 0 should be awarded for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It's important for assessing operational performance.

In 2023, Cirrus Logic (CRUS) reported an Asset Turnover of 0.9064, an increase from 0.9011 in 2022. This 0.58% rise signifies slightly improved efficiency in asset utilization, resulting in a 1-point addition. Historically, the company has registered varying Asset Turnover ratios, peaking at 1.3544 in 2013, while 2007 saw a low of 0.5425. With the most recent increase, Cirrus Logic appears to be tilting back toward operational strength, although not at its prior peak. Overall, the trend is marginally positive this year.