Last update on 2024-06-05

Walt Disney (DIS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Detailed Piotroski F-Score analysis of Walt Disney (DIS) for 2023, covering profitability, liquidity, and leverage, with graphics and historical trends.

Short Analysis - Piotroski Score: 6

We're running Walt Disney (DIS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a metric that rates a company's financial strength on a scale from 0 to 9, based on nine criteria, including profitability, liquidity, and operating efficiency. Walt Disney (DIS) has a Piotroski F-Score of 6, which shows a mix of strengths and weaknesses. Here's the breakdown from a recent analysis: **Profitability** - Disney has a positive net income of $2.354 billion for 2023 and a positive cash flow from operations at $9.87 billion. Unfortunately, its Return on Assets (ROA) declined from 0.0154 in 2022 to 0.0115 in 2023, less than the industry's median ROA of 0.4033, but its operating cash flow is significantly higher than its net income. **Liquidity** - Disney's leverage decreased, its current ratio improved to 1.0522, which is near the industry’s median. However, Disney increased its number of outstanding shares from 1,822,000,000 in 2022 to 1,828,000,000 in 2023. **Operating Efficiency** - The company's gross margin dropped from 0.3424 in 2022 to 0.3341 in 2023, below the industry median of 0.4033. On the bright side, Disney's asset turnover ratio improved from 0.4063 in 2022 to 0.4345 in 2023. These mixed results demonstrate that Disney still has commendable upsides and strong points, such as positive cash flows and decreasing leverage, but also some areas that need improvement, like ROA and gross margin.

Insights for Value Investors Seeking Stable Income

Disney (DIS) showing a Piotroski F-Score of 6 reveals a moderately strong financial position with room for improvement. For potential investors, this score is decent and suggests that Disney is reasonably healthy. Key strengths include its resilient profitability, positive cash flow, and lowered leverage. Areas that require caution are its declining ROA, increased shares outstanding, and decreasing gross margin. If you’re an investor looking for stability with some growth prospects, Disney could be a good option. However, if high ROA and solid gross margin are top priorities, it might be wise to consider exploring additional investment opportunities.

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

Profitability of Walt Disney (DIS)

Company has a positive net income?

Net income indicates a company’s profitability after deducting all its expenses. It is crucial for assessing financial health.

Walt Disney (DIS) posted a net income of $2.354 billion in 2023, which is positive. This marks a significant turn since its pandemic-impacted losses in 2020 of -$2.864 billion. The company's ability to revert to positive net income demonstrates resilience and operational recovery, especially noteworthy given their highest net income was $12.598 billion in 2018. Therefore, Walt Disney earns 1 point for this criterion under the Piotroski Score.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates how well a company can generate cash from its core business operations.

For Disney, the CFO for 2023 stands at $9.87 billion, which is positive. Over the past 20 years, Disney's CFO has demonstrated steady growth with few downturns, showcasing its ability to consistently generate cash. This is a good indicator of financial health and operational efficiency, adding 1 point to the Piotroski score for this criterion.

Return on Assets (ROA) are growing?

Change in ROA is calculated as the difference in return on assets from one year to the next. It shows if a company is improving or deteriorating in its asset profitability.

Walt Disney's (DIS) ROA decreased from 0.0154 in 2022 to 0.0115 in 2023, indicating a decline in profitability per asset employed. This trend is deemed negative, and thus, the criterion points would be 0. The company's 2023 ROA is considerably low when compared to the industry median ROA of 0.4033, suggesting it falls short in terms of asset efficiency relative to its peers.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income indicates that a company is generating ample cash from its operations, which is a positive signal of its ability to cover operating expenses.

In 2023, Walt Disney's operating cash flow was $9.87 billion, while its net income was $2.35 billion. Clearly, the operating cash flow is significantly higher than net income, resulting in a score of 1 point for this criterion. This trend is positive as it demonstrates Disney's robust operational efficiency and its ability to generate cash flow, which further underlines financial stability. Over the past 20 years, we see fluctuations but an overall growth in both operating cash flow and net income, exemplifying Disney's resilient business model and successful strategic initiatives.

Liquidity of Walt Disney (DIS)

Leverage is declining?

Change in Leverage refers to the variation in the company's debt-to-equity ratio over time. This measure is crucial as it indicates how Walt Disney (DIS) is financing its operations—whether through debt or equity. A reduction in leverage is often seen positively because it suggests a company is potentially minimizing its financial risks.

The leverage for Walt Disney (DIS) has shown a noticeable decrease from 0.2384 in 2022 to 0.2216 in 2023. This movement results in a positive score of 1 point according to the Piotroski F-Score criteria. Historically, the leverage has fluctuated, but the recent year's decline suggests that Disney is possibly becoming less dependent on debt, which is generally favorable. With the last 20 years data showing various peaks and troughs, the current decline follows a high in 2020, indicating a potential trend of deleveraging back to more sustainable levels.

Current Ratio is growing?

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

In 2023, Walt Disney (DIS) reported a Current Ratio of 1.0522, up from 1.0009 in 2022. Since the Current Ratio has increased, we add 1 point as per the Piotroski criteria. This means Disney has slightly enhanced its liquidity position compared to 2022. Reviewing the data over the last 20 years, Disney's Current Ratio has shown variability, peaking at 1.3308 in 2009, and hitting a low of 0.8109 in 2017. In comparison, the industry's median over the same period mirrors a similar fluctuating pattern. The industry median for 2023 is exactly 1.0522, aligning with Disney's current ratio, indicating Disney's liquidity is average compared to industry norms. Hence, an increase in Disney’s Current Ratio is definitely a positive signal, although not exceptionally beyond market trends.

Number of shares not diluted?

Change in Shares Outstanding tracks how the number of shares available in the company has shifted, which can indicate dilution of value.

In 2023, Walt Disney's outstanding shares increased to 1,828,000,000 from 1,822,000,000 in 2022. This rise of 6,000,000 shares represents an increase. According to the Piotroski criteria, if the number of shares outstanding decreases, it adds 1 point to the score. Conversely, if shares outstanding increase, no points are added. Therefore, for Walt Disney, the increase in outstanding shares from 2022 to 2023 results in a score of 0 for this criterion. Looking at the historical data, we observe a clear trend. For instance, from 2003 to 2023, there have been notable fluctuations. The number peaked in 2007 at 2,092,000,000 shares and significantly dropped in 2014 to 1,759,000,000 shares. The period after 2018 shows a consistent rise, hitting the current 1,828,000,000 mark. Such changes in share count can often be attributed to stock buybacks, new equity issues, acquisitions, or other corporate actions. For investors, an increase in shares outstanding can dilute shareholder value, whereas a decrease typically consolidates it. Thus, the increase in 2023 isn't favorable concerning this particular Piotroski criterion.

Operating of Walt Disney (DIS)

Cross Margin is growing?

Gross Margin compares the relative profit after accounting for the cost of goods sold, showing operational efficiency.

In 2023, Walt Disney Company (DIS) reported a Gross Margin of 0.3341, compared to 0.3424 in 2022. This indicates a decrease, as the margin fell by 0.0083 points. Over the last two decades, Disney's Gross Margin has significantly improved from as low as 0.1009 in 2003 to peak levels above 0.45 during the mid-2010s before witnessing recent declines. Despite outperforming its own historical metrics, Disney's current margin is still below the 2023 industry median of 0.4033. As Gross Margin decreased, no point is given. This trend suggests potential challenges in cost management or pricing power.

Asset Turnover Ratio is growing?

Asset turnover measures a company’s efficiency in using its assets to generate sales. An increasing trend indicates better utilization of assets, enhancing profitability.

In 2023, Walt Disney's asset turnover stood at 0.4345, up from 0.4063 in 2022. This increase garners a positive evaluation, awarding the company 1 point for this criterion. The upward movement in asset turnover reflects Disney's improved ability to leverage its assets for higher sales, a favorable sign of operational efficiency. Over the past 20 years, Disney has seen fluctuations, with a notable dip after 2018 reaching its lowest in 2020 at 0.3306, primarily due to COVID-19 impacts. The rebound in recent years indicates recovery and a potential return to earlier levels of efficiency.