Last update on 2024-06-05

Dassault Aviation (DAU0.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

In-depth Piotroski F-Score analysis of Dassault Aviation (DAU0.F) for 2023, revealing a score of 3 out of 9 and examining profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 3

We're running Dassault Aviation (DAU0.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is used to measure a company's financial health, with a scale from 0 to 9. Dassault Aviation (DAU0.F) scored a 3 out of 9 on the Piotroski scale. Here's the breakdown: **Profitability:** - Positive Net Income (+1 point) - Negative Cash Flow from Operations (0 points) - Decline in Return on Assets (0 points) - Operating Cash Flow lower than Net Income (0 points) **Liquidity:** - Increase in leverage (0 points) - Decrease in Current Ratio (0 points) - Decrease in Outstanding Shares (+1 point) **Operating Efficiency:** - Increase in Gross Margin (+1 point) - Decrease in Asset Turnover (0 points)

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 3, Dassault Aviation shows some strengths but also significant weaknesses. The company has a positive net income and improving gross margin, but issues like declining ROA, negative cash flows, and increased leverage raise red flags. This suggests stability problems and inadequate asset management. As a cautious investor, you might want to look for companies with stronger financial health. While Dassault Aviation shows potential through initiatives like share buybacks, the risks outweigh the positives right now. So, it may not be the best time to invest in this stock.

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

Profitability of Dassault Aviation (DAU0.F)

Company has a positive net income?

Net income is a key indicator of a company's profitability, measuring the amount of revenue that exceeds expenses.

The net income for Dassault Aviation in 2023 stands at €693,398,000, a positive figure which adds 1 point to the Piotroski score. Historically, Dassault Aviation has maintained a positive net income over the last 20 years, with annual fluctuations. This positive trend is essential, indicating consistent profitability and effective cost management, essential for investor confidence and future growth prospects.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a measure of the amount of cash generated by a company's regular operating activities within a specific time period. It's important to consider as it indicates a company's ability to generate sufficient positive cash flow to maintain and grow its operations.

For Dassault Aviation (DAU0.F), the Cash Flow from Operations in 2023 is -€672,605,000, which is negative. This marks a significant deviation from their positive CFOs in some of the past years, such as the €5,109,971,000 in 2022. A negative CFO can indicate potential liquidity issues and may hinder the company’s operational growth and sustainability efforts. Given the data, the score for this criterion would be 0, aligning with 9 other years over the past two decades that also reported negative CFOs. This trend, particularly the sharp drop from 2022 to 2023, is worrisome and suggests challenges in the company's ability to generate cash from its core activities.

Return on Assets (ROA) are growing?

The criterion of change in Return on Assets (ROA) for Dassault Aviation examines the difference in the company's ROA between two consecutive years. This metric signifies how effectively a company is using its assets to generate earnings. An improvement in ROA suggests better asset efficiency and management, which is crucial for financial health and investor confidence. Consequently, when the ROA increases, it guarantees an additional point in the Piotroski analysis.

Comparing the ROA of 0.0301 in 2023 with 0.037 in 2022 for Dassault Aviation, it's noticeable that there is a decrease, not an increase, in ROA. This denotes a reduction in asset profitability. Despite the company's ROA witnessing the 2022 performance, a dip followed in 2023, reflecting potential challenges in utilizing its assets optimally. When contextualizing these figures within the broader landscape of the industry's median ROA over the last 20 years, which notably fluctuates between 0.2171 and 0.2688, Dassault's figures are significantly lower. This underscores a trend of underperformance in comparison with industry standards. Thus, for this criterion, Dassault Aviation does not earn the additional point in the Piotroski scoring model. Instead, the score should be set to 0, reflecting the company's poorer utilization of assets year-over-year.

Operating Cashflow are higher than Netincome?

Explain the criterion for Dassault Aviation (DAU0.F) and why it is important to consider

Comparing Operating Cash Flow (OCF) to Net Income helps gauge the quality of a company's earnings. In FY2023, Dassault Aviation's OCF stands at -672.6 million while Net Income is 693.4 million. Given that OCF is substantially lower than Net Income, this indicates potential issues with cash earnings. Historical analysis likewise shows fluctuating cash flow figures, underscoring instability. Therefore, a score of 0 is justified.

Liquidity of Dassault Aviation (DAU0.F)

Leverage is declining?

Change in Leverage examines whether a company's financial risk has decreased over time, which can indicate improved financial stability.

For Dassault Aviation (DAU0.F), the leverage ratio has increased from 0.0085 in 2022 to 0.0088 in 2023. This 0.0003 uptick in leverage suggests that the company has taken on more debt relative to its equity, which is generally seen as negative in the context of financial health. Given the increase, we assign a score of 0 according to the Piotroski criterion. Historically, Dassault Aviation's leverage has shown significant variation, peaking at 0.0951 in 2015 before a general declining trend. However, this recent increase, albeit slight, raises caution.

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. A higher ratio indicates stronger liquidity.

For Dassault Aviation (DAU0.F), the Current Ratio decreased from 1.1196 in 2022 to 1.0685 in 2023. This trend is not favorable as it indicates a slight weakening in the company’s short-term financial health. Over the last 20 years, Dassault's Current Ratio has mostly trended below the industry median, which might raise concerns about its comparative liquidity position. Hence, it’s crucial for the company to manage its short-term liabilities effectively to avoid potential liquidity crises.

Number of shares not diluted?

Shares Outstanding represent the number of shares of a company that are currently owned by all its shareholders. The change in shares outstanding is significant as an increasing number typically indicates dilution which can erode shareholder value, whereas a decreasing number often suggests share buybacks which can indicate a healthy position.

The Outstanding Shares for Dassault Aviation have decreased from 83,117,272 in 2022 to 80,926,105 in 2023. This reduction adds 1 point according to the Piotroski criteria, indicating a positive trend as it suggests potential share buybacks. Reviewing the additional dataset over the past 20 years shows a general trend of rising shares outstanding until 2015 and a subsequent stabilization, followed by fluctuations. This recent decrease in 2023 could signal a strategic move to enhance shareholder value.

Operating of Dassault Aviation (DAU0.F)

Cross Margin is growing?

Analyzing the change in Gross Margin for Dassault Aviation (DAU0.F) provides a clear indicator of the company’s profitability improvement over the year. A higher Gross Margin suggests better efficiency and cost management.

Comparing the Gross Margin of 0.3785 in 2023 with 0.3131 in 2022, it is evident that the Gross Margin for Dassault Aviation has increased. Adding 1 point for the Piotroski criterion. This increase signifies an improvement in profitability from 31.31% to 37.85%. Historically, over the past 20 years, Dassault Aviation's Gross Margin has seen fluctuations but remains significantly higher than the industry median, which is at 24.84% in 2023. Such a trend reflects the company's strong market position and effective management strategies amidst industry challenges.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets to generate sales revenue. It is essential for evaluating operational efficiency.

In 2022, Dassault Aviation had an Asset Turnover of 0.3587, which dropped to 0.2088 in 2023. This indicates a significant decrease, marked by a 41.8% decline. Decreasing Asset Turnover often suggests that the company is less effective in utilizing its assets to generate sales. Considering a downtrend over the past 20 years, from 0.5746 in 2003 to the current 0.2088, this trend appears disconcerting. Thus, Asset Turnover did not increase, awarding it 0 points against this criterion.