Last update on 2024-06-05

Dominion Energy (D) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Analyze Dominion Energy (D) with a Piotroski F-Score of 7/9 for 2023 to assess financial health including profitability and liquidity.

Short Analysis - Piotroski Score: 7

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

The Piotroski F-Score is a measure between 0 to 9 that evaluates a company's financial strength based on profitability, liquidity, and leverage. Dominion Energy scored 7 out of 9 in the Piotroski analysis, indicating a strong financial position. The criteria include profitable net income and cash flow, increasing return on assets, cash flow higher than net income, and an improving current ratio. The company also saw improved gross margins but experienced increased leverage and a slight decline in asset turnover.

Insights for Value Investors Seeking Stable Income

Given Dominion Energy's high Piotroski F-Score of 7, the company appears to be financially strong and potentially undervalued. It's good in profitability and has shown improvements in most areas, but potential investors should keep an eye on the increased leverage and declining asset turnover. Overall, Dominion Energy is worth considering for investment due to its strong fundamentals and improving financial metrics.

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

Profitability of Dominion Energy (D)

Company has a positive net income?

Net income determination is essential for understanding a company's profitability over a fiscal period and serves as a critical metric in the Piotroski F-Score.

For the year 2023, Dominion Energy (D) reported a net income of $1,994,000,000, which is positive. Hence, this criteria adds 1 point to the Piotroski F-Score. Analyzing the data from the last 20 years, Dominion Energy has generally maintained profitability, with negative net income in only 2020 at -$401,000,000. The positive trend in 2023 is favorable, indicating resilience or recovery in financial performance. This consistent profitability underscores robust business operations and stable revenue generation, enhancing investor confidence.

Company has a positive cash flow?

Cash Flow from Operations (CFO) pertains to the cash a company generates from its regular business operations and is an indicator of its efficiency in producing cash from normal business activities. Positive CFO is vital as it suggests the company can cover its operating expenses, reinvest in the business, and potentially pay dividends or reduce debt without relying on external funding.

For 2023, Dominion Energy reported a Cash Flow from Operations (CFO) of $6,572,000,000, which is a positive figure. This positive CFO adds 1 point in the Piotroski F-Score analysis. Over the past two decades, Dominion Energy’s CFO has fluctuated but generally showed an upward trajectory. Notably, there was a dip in 2007 when the CFO was -$246,000,000, but the overall trend has been ascending. The most recent figure, $6.57 billion, is the highest in the last 20 years, illustrating strong operational cash generation, which is a favorable indicator of financial health.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures how efficiently a company utilizes its assets to generate profit. An increase in ROA indicates better efficiency and profitability.

For 2023, Dominion Energy (D) reported an ROA of 0.0187, up from 0.0129 in 2022. This marks a positive change and adds 1 point to its Piotroski score. Despite the improvement, the industry median for ROA remains significantly higher at 0.4109 for 2023, suggesting that while Dominion Energy has improved its asset efficiency, it still lags behind industry peers in generating returns from its assets.

Operating Cashflow are higher than Netincome?

Cash flow from operations should be higher than net income.

For Dominion Energy (D), the operating cash flow for the year 2023 stands at $6.572 billion, while the net income for the same year is $1.994 billion. Given that the operating cash flow significantly surpasses the net income, the company earns a point for this criterion. Looking at historical data, Dominion Energy's operating cash flow has generally shown a robust upward trend, which is indicative of strong operational efficiency. This positive trend in operating cash flow relative to net income is favorable and suggests that the company's core operations are profitable and capable of generating sufficient cash. This difference also highlights the potential non-cash charges and accounts for items that don't impact immediate cash flow. The accruals, which represent non-cash charges, have been relatively stable over the years with minor variations, further boosting investor confidence in Dominion Energy’s operations. Overall, this is a good trend for Dominion Energy, indicating a solid operational foundation and a positive signal for investors focused on cash generation capabilities.

Liquidity of Dominion Energy (D)

Leverage is declining?

Change in Leverage measures the amount of debt used to finance assets, which can indicate financial stability.

Dominion Energy's leverage has increased from 0.3049 in 2023 to 0.3287 in 2022. Over the past 20 years, leverage has shown fluctuation, peaking at 0.4222 in 2016 and reaching its lowest at 0.2783 in 2005. As leverage has increased in the latest year, it suggests the company is taking on more debt to finance its operations, potentially increasing financial risk.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated by dividing current assets by current liabilities.

The Current Ratio for Dominion Energy increased from 0.7323 in 2022 to 1.0372 in 2023. This improvement indicates that the company's liquidity position has strengthened, affording it greater short-term financial flexibility. Historically, Dominion Energy's Current Ratio has often lagged behind the industry median, which stood at 0.7878 in 2023. However, the 2023 current ratio not only surpasses the company's historical averages but also exceeds the industry median for the first time in recent years. Given these factors, the criterion yields a score of 1 for Dominion Energy.

Number of shares not diluted?

Explain the criterion for Dominion Energy (D) and why it is important to consider

Outstanding shares represent the total number of a company’s shares that are currently owned by all its shareholders, including shares held by institutional investors and restricted shares owned by company insiders. An increase in outstanding shares usually indicates that the company has issued new shares of stock, which often leads to shareholder dilution. This is critical for investors to monitor because it can affect earnings per share (EPS) and an investor's ownership percentage.

Operating of Dominion Energy (D)

Cross Margin is growing?

Gross margin measures the proportion of revenue that a company retains after incurring direct costs associated with producing goods or services. It is crucial for understanding a company’s operational efficiency and profitability.

Dominion Energy's gross margin increased to 0.4834 in 2023 from 0.4575 in 2022, marking an improvement of approximately 5.66%. This indicates a slight enhancement in operational efficiency and cost management. Over the past 20 years, Dominion Energy's gross margin has shown significant variability, ranging from a low of 0.2225 in 2012 to a high of 0.5963 in 2006. Meanwhile, the industry's median gross margin for 2023 was 0.4109, showing that Dominion Energy outperformed the industry average. This is a positive indicator and merits a point addition in the Piotroski analysis for improved gross margin in 2023.

Asset Turnover Ratio is growing?

Asset turnover measures a company's efficiency in using its assets to generate sales. It is crucial as it indicates how well the firm is employing its assets to increase revenue.

In 2023, Dominion Energy's Asset Turnover stood at 0.1346, a slight decrease from the 0.1364 recorded in 2022. Despite this marginal decline, it's important to consider the overall trend illustrated by the data from the past 20 years. Historically, the Asset Turnover Ratio reflects a consistent downtrend from a high of 0.4014 in 2008 to its current level. Such a persistent decline may signal inefficiencies in the company's asset use or changing market conditions. Thus, for 2023, since the Asset Turnover did not increase, this criterion scores 0 points in the Piotroski analysis.