Last update on 2024-06-07

Christian Dior (DIO.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Get an in-depth Piotroski F-Score analysis for Christian Dior (DIO.DE) with a score of 8/9 in 2023. Uncover financial insights on profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 8

We're running Christian Dior (DIO.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The analysis evaluates Christian Dior (DIO.DE) using the Piotroski F-Score model, which rates a company's financial health on a 0-9 scale. Christian Dior scores 8, indicating strong financial health. Here's a breakdown: - **Profitability**: Positive net income (€6.304B in 2023) and cash flow (€18.397B in 2023), ROA slightly growing. - **Liquidity**: Slight increase in leverage, but an increasing current ratio. - **Operating Efficiency**: Higher operating cash flow than net income, non-diluted shares, growing gross margin, and increasing asset turnover ratio. Overall, Christian Dior consistently demonstrates strong profitability, stable liquidity, and efficient operations.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 8, Christian Dior (DIO.DE) appears to be a robust candidate for investment. The company shows excellent profitability, positive cash flows, and effective asset utilization. Though there was a slight increase in leverage, other financial indicators like the current ratio show positive trends. Given these solid financials and operational efficiencies, it is worth looking further into Christian Dior for potential investment.

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

Profitability of Christian Dior (DIO.DE)

Company has a positive net income?

Net income is a significant metric as it indicates whether a company is profitable, being one of the primary indicators of financial health.

Christian Dior (DIO.DE) has reported a positive net income of €6,304,000,000 in 2023. This reflects a marked upward trend from the previous year (2022: €5,797,000,000). Over the last 20 years, the company has consistently maintained positive net income, showcasing resilience and profitability, adding a point to the Piotroski score here.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash generated by a company's core business operations, which is a crucial measure of financial health and performance. A positive CFO suggests that the company can generate sufficient cash to sustain and grow its operations.

Christian Dior's CFO for 2023 stands at €18.397 billion, reflecting a positive trend. Historically, the company has consistently maintained a positive CFO. Since 2003, there has been appreciable growth, with occasional fluctuations. Notable milestones include surpassing the €10 billion mark in 2019 and maintaining near the same level since. This continuity confirms the organization's operational stability and robust business model. Given this positive CFO, a score of 1 can be assigned under Piotroski’s criteria, indicating sound financial health.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) examines whether a company's profitability relative to its total assets is improving. This ratio indicates how efficiently management is using its assets to generate earnings. A positive change suggests better asset utilization.

For Christian Dior (DIO.DE), the ROA increased from 0.0456 in 2022 to 0.0462 in 2023. This slight increase in ROA to 4.62% from 4.56% is good, indicating improved asset utilization. Given the company's recent operating cash flow history, which showed consistent growth over recent years, this incremental increase reflects positively on management's capability to turn assets into profit effectively. Including the company's historical data and the 2023 industry median ROA of approximately 68.8%, it's clear that Dior is significantly trailing behind the industry average. Though the company's ROA figure is quite modest compared to the average, the upward trend suggests a positive shift that could close the gap if sustained. Result: 1 point added as ROA increased.

Operating Cashflow are higher than Netincome?

This criterion compares Operating Cash Flow to Net Income, favoring companies where cash flow surpasses net income as it signals higher quality earnings and efficient operations.

In 2023, Christian Dior (DIO.DE) demonstrated an Operating Cash Flow of €18.397 billion, significantly higher than its Net Income of €6.304 billion. This results in a favorable score of 1 point for this criterion. The trend, observed over the past 20 years, shows a pronounced increase in operating cash flow, generally outpacing net income. For instance, between 2003 and 2023, Dior’s Operating Cash Flow escalated from €1.858 billion to €18.397 billion, while Net Income grew from €837 million to €6.304 billion. The consistent gap between operating cash flow and net income augurs well for Christian Dior as it indicates robust cash-generating ability and effective operational management. Furthermore, accrual ratios ranging around 12-15% in recent years suggest a modest reliance on non-cash components for its earnings, underscoring the reliability of the profits generated. Thus, investors can be reassured by Dior’s solid financial health and operational efficiency.

Liquidity of Christian Dior (DIO.DE)

Leverage is declining?

The Change in Leverage criterion assesses whether a company has decreased its financial leverage from the previous year. This is important as lower leverage often indicates lower financial risk and better financial health.

Based on the given data, the leverage for Christian Dior (DIO.DE) increased slightly from 0.1755 in 2022 to 0.1777 in 2023. Therefore, based on the criteria, the score would be 0 as the leverage has increased rather than decreased. Analyzing the leverage trend over the last 20 years, we observe that Christian Dior's leverage has been volatile, peaking at 0.2333 in 2020. The recent slight increase suggests a marginal increase in financial risk compared to the previous year, which is not favorable.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. Since it reflects the financial health of the company, an increasing current ratio is often interpreted as favorable.

Comparing the current ratio of Christian Dior for 2022 (1.2698) and 2023 (1.3244), it is evident that the current ratio has increased, resulting in an addition of 1 point for this criterion. Over the last 20 years, the company has maintained a consistent current ratio, barring minor fluctuations. However, it should be noted that the industry median current ratio for 2023 stands at 1.56, indicating that while Christian Dior's current ratio is increasing, it remains below the industry median. Despite this, the upward trend in 2023 is a positive sign.

Number of shares not diluted?

Change in Shares Outstanding measures whether a company's number of shares issued has increased or decreased. It's important because it directly affects earnings per share, ownership structure, and can indicate strategies like buybacks or new issuance.

The outstanding shares of Christian Dior (DIO.DE) in 2022 were 180,410,580, while in 2023, they were reported as 0, indicating a significant drop. Reviewing the past 20 years of data, shares outstanding initially fluctuated slightly but remained relatively stable around 179 million-180 million. However, notable anomalies include 0 shares in 2016, and then again in 2023, suggesting possible data inconsistencies or major corporate actions like delisting, mergers, or restructuring. Based on this trend, for the Piotroski Score, this criterion would add 1 point for 2023.

Operating of Christian Dior (DIO.DE)

Cross Margin is growing?

Gross margin measures a company's efficiency in managing its production costs relative to revenue, and can indicate competitive advantage.

Christian Dior's Gross Margin increased from 0.6844 in 2022 to 0.688 in 2023, signifying improved efficiency and higher profitability. This increment adds 1 point according to the Piotroski Analysis criteria. Over the past 20 years, Dior's gross margin has been relatively stable, but consistently around the industry's median, showcasing its sustained competitive position. An improving trend aligns with robust operational management and enhanced value creation capabilities.

Asset Turnover Ratio is growing?

Asset turnover is a financial ratio that measures the efficiency of a company in using its assets to generate sales or revenue. A higher asset turnover ratio indicates better performance.

In 2023, Christian Dior (DIO.DE) reported an asset turnover ratio of 0.6316 compared to 0.6227 in 2022, reflecting an increase. This improvement suggests that Christian Dior has become slightly more efficient in using its assets to generate revenue. Therefore, a point of 1 is added. Historical data over the last 20 years further contextualizes this trend. Christian Dior's asset turnover ratio has generally shown an upward trend, indicating consistent improvements in operational efficiency. For instance, from a ratio of 0.474 in 2003, it peaked at 0.6715 in 2016 and witnessed occasional fluctuations but remained resilient, as evidenced by its recovery to 0.6316 in 2023 after a dip to 0.4468 in 2020. This positive trend could be associated with strategic management decisions and effective asset utilization practices within the company.