Last update on 2024-06-05

Duke Energy (DUK) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Piotroski F-Score analysis of Duke Energy for 2023 reveals a score of 6/9, assessing key profitability, liquidity, and operational efficiency metrics.

Short Analysis - Piotroski Score: 6

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

The Piotroski F-Score for Duke Energy (DUK) was evaluated, resulting in a score of 6 out of 9, indicating a moderately strong financial position. The analysis covers profitability, liquidity, and operating efficiency: 1. Duke Energy has shown positive net income and a consistent upward trend, earning 1 point for profitability. 2. Positive cash flow from operations, with a significant increase since 2003, adds another point. 3. Return on Assets (ROA) saw a slight improvement, contributing 1 point. 4. Operating cash flow higher than net income earned 1 point, reflecting strong operational efficiency. 5. An increase in leverage ratio resulted in a deduction of 1 point. 6. Current Ratio slightly improved, adding 1 point for better liquidity. 7. Increase in shares outstanding yielded 0 points due to potential value dilution for shareholders. 8. Growing gross margin indicates better cost management, adding 1 point. 9. Decline in asset turnover ratio led to 0 points, signaling a need for better asset utilization.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 6, Duke Energy (DUK) presents a generally strong investment potential with room for improvement in some areas. The consistent profitability, positive cash flow, and improved gross margin are promising signs. However, the increase in leverage ratio and decline in asset turnover highlight areas of caution. As an investor, considering the overall positive financial indicators and stable performance history, Duke Energy could be worth investigating further, keeping an eye on leverage and asset efficiencies moving forward.

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

Profitability of Duke Energy (DUK)

Company has a positive net income?

Net income represents the profitability of a company after accounting for all expenses, taxes, and costs. A positive net income indicates a profitable and potentially stable business.

Duke Energy's net income for 2023 stands at $2.841 billion, a robust positive figure, earning it a favorable score on this criterion. Reflecting on the past 20 years, Duke Energy has demonstrated a generally positive net income trend, aside from 2003 where it recorded a loss of $1.323 billion. Net income has shown a consistent upward trajectory, particularly notable from 2011 onward, indicative of the company's enhancing profitability. This continuous positive performance paints a strong, stable outlook for Duke Energy and substantiates the awarding of this point.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects the cash generated by a company’s regular business operations and is crucial for assessing a company's financial viability. Positive CFO indicates that the company is capable of generating sufficient cash to maintain and grow its operations.

In 2023, Duke Energy reported a Cash Flow from Operations (CFO) of $9,878,000,000. This figure is indeed positive, thereby earning the company 1 point for this criterion. Historically, Duke Energy’s CFO has shown consistent growth with a significant upward trend, especially from 2019 onward. This steady increase reflects the company's strong operational performance and its capability to effectively manage and expand its core business operations. For context, over the past 20 years, the CFO started at $3,874,000,000 in 2003 and has nearly tripled by 2023. This historical trend underscores Duke Energy’s robust and improving financial health, an encouraging sign for investors.

Return on Assets (ROA) are growing?

Compare the change in Return on Assets (ROA). An increase improves profitability, enhancing financial health.

In 2023, Duke Energy's ROA slightly increased to 0.016 from 0.0147 in 2022. This uptick is a positive indicator, reflecting improved utilization of assets to generate profit. This ROA increase adds 1 point in the Piotroski score. While modest, this positive trend marks an improvement in efficiency. Nevertheless, when compared to the last 20 years, such as in 2021, the firm's ROA remains below significant historical highs, indicating room for further operational improvement. Additionally, the industry median ROA of 0.4109 emphasizes the deviation, suggesting a competitive disadvantage. However, the gradual rise signals potential in optimizing asset usage for future growth.

Operating Cashflow are higher than Netincome?

This criterion checks if the company generates more cash through operations than its net income, a sign of a strong business model.

For Duke Energy (DUK) in 2023, the Operating Cash Flow stands at $9,878,000,000, whereas the Net Income is $2,841,000,000. Observing these figures, we note that the Operating Cash Flow is substantially higher. According to the Piotroski F-Score mechanism, this condition is satisfied, and Duke Energy earns 1 point for it. Operating Cash Flow being higher than Net Income suggests robust operational efficiency. Over the last 20 years, Duke Energy's Operating Cash Flow has shown consistent growth, especially from 2019 onwards. For example, in 2020, it was $8,856,000,000, reaching $9,878,000,000 in 2023. Comparatively, Net Income has fluctuated but mostly remained lower than Operating Cash Flow. Thus, this is a positive indicator, reflecting a resilient and profitable operation.

Liquidity of Duke Energy (DUK)

Leverage is declining?

Change in leverage reflects a company's debt-to-equity ratio, an important indicator of financial health. Lower leverage is preferable as it indicates lower risk and reliance on debt.

The leverage ratio for Duke Energy increased from 0.3748 in 2022 to 0.4148 in 2023. This elevates the leverage and thus the debt ratio, signaling rising dependency on debt financing. Historically, the leverage ratio fluctuated but remained relatively stable between 2008 (0.2496) and 2022. The recent increase is notable and detracts 1 point in the Piotroski score, pointing towards higher financial risk.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its current assets. A ratio above 1 indicates more available assets than liabilities, while a ratio below 1 raises liquidity concerns.

Duke Energy's Current Ratio increased from 0.7006 in 2022 to 0.7388 in 2023, reflecting a slight improvement in liquidity. This earns 1 point in Piotroski Analysis. Although above the 2023 industry median (0.7878), it indicates financial headwinds. Over the past two decades, Duke Energy's trend shows a general decline from a peak of 1.5969 in 2010, consistently falling short of industry medians except in scattered years. In 2023, the current ratio of Duke Energy remains lower than the industry median. Sustained improvement is critical for financial resilience.

Number of shares not diluted?

Change in Shares Outstanding measures if the company is issuing more shares or buying back. An increase in shares may dilute the value for existing shareholders, while a decrease indicates a buyback.

Based on the analysis of Duke Energy's outstanding shares, we observe an increase from 770,000,000 shares in 2022 to 771,000,000 shares in 2023. This represents an incremental rise of 1,000,000 shares, thereby resulting in a score of 0. From a long-term perspective, Duke Energy's shares have generally been increasing since 2003, growing from around 301 million in 2003 to 771 million in 2023. The trend of increasing shares over the past two decades signifies potential dilution of shareholder value.

Operating of Duke Energy (DUK)

Cross Margin is growing?

Gross Margin assesses the percentage of revenue retained after incurring the direct costs of producing goods or services. A higher gross margin signifies a company is efficiently controlling its production costs relative to revenue.

In 2023, Duke Energy (DUK) reported a gross margin of 0.4734, compared to 0.4511 in 2022, indicating an increase. This growth suggests improved profitability and cost management. Over the last 20 years, Duke Energy's gross margin has shown volatility with notable highs reaching 0.6554 (2006). Meanwhile, the industry median has generally trended lower than Duke Energy's figures, except for a few instances. With the 2023 gross margin exceeding the industry's median of 0.4109, Duke Energy illustrates more efficient cost containment compared to its peers. Thus, Duke Energy earns 1 point for this criterion.

Asset Turnover Ratio is growing?

Asset turnover measures a company's efficiency in using its assets to generate sales. A higher ratio indicates better utilization. Evaluating this for Duke Energy (DUK) helps assess managerial efficiency.

In 2023, Duke Energy's asset turnover ratio was 0.1637, a slight decline from 0.1655 in 2022. This indicates a decrease in asset utilization efficiency. Historically, their asset turnover ratio has seen a downward trend over the last two decades, peaking at 0.403 in 2004 and dropping to recent lows. This trend may reflect industry dynamics, changes in asset base, or operational challenges. For Piotroski scoring, this translates to 0 points in the ‘Change in Asset Turnover’ criterion, signaling underperformance in optimizing asset use.