Last update on 2024-06-07

Euronet Worldwide (EEFT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Piotroski F-Score analysis of Euronet Worldwide (EEFT) for 2023, highlighting a score of 6/9 based on profitability, liquidity, and leverage criteria.

Short Analysis - Piotroski Score: 6

We're running Euronet Worldwide (EEFT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

We analyzed Euronet Worldwide (EEFT) using the Piotroski F-Score, a measure to assess the financial condition of a company, focusing on profitability, liquidity, and efficiency. EEFT scored 6 out of 9 based on nine criteria. Key points for EEFT included positive net income of $279.7 million, robust cash flow from operations at $643.1 million, increased ROA, operating cash flow exceeding net income, decreasing leverage, and reduced outstanding shares indicating possible share buybacks. However, EEFT did not gain points for a decreasing gross margin, slight decline in asset turnover, and minimal reduction in current ratio. Overall, the score implies fairly strong financial health and efficiency for EEFT.

Insights for Value Investors Seeking Stable Income

Given a Piotroski Score of 6 out of 9, Euronet Worldwide (EEFT) appears to have good financial strength and operational efficiency. Despite some minor areas needing improvement, the strong points, such as high profitability, efficient cash flow management, and decreasing leverage, make EEFT a reasonably attractive stock for further consideration. Investors seeking robust companies with solid prospects might find EEFT worth looking into further, especially given its positive net income and cash flows.

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

Profitability of Euronet Worldwide (EEFT)

Company has a positive net income?

The criterion checks the net income's positivity to assess a company's profitability. A positive net income signifies profit; a negative net income indicates a loss.

For 2023, Euronet Worldwide (EEFT) achieved a net income of $279.7 million, which is positive. This strong net income figure indicates robust profitability and operational efficiency. Historically, the company's net income has fluctuated, sometimes showing losses (e.g., -$195.09 million in 2008). Yet, 2023 represents the highest net income over the past 20 years, reflecting an all-time peak in its financial performance. Therefore, Euronet earns 1 point for this criterion, evidencing strong performance.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion checks if a company can generate cash flow from its core operating activities. A positive CFO indicates good internal liquidity and operating efficiency.

For Euronet Worldwide (EEFT), the CFO in 2023 is $643.1 million, which is positive. This indicates that the company can generate significant cash from its core operations. Over the last 20 years, Euronet's CFO has shown a consistent upward trend, peaking at $748.3 million in 2022 before slightly decreasing in 2023. This positive overall trend is indicative of robust operating efficiency and a healthy liquidity position, which are both vital for long-term sustainability and growth. Therefore, Euronet earns 1 point for this criterion.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) criterion helps investors gauge how efficiently a company is utilizing its assets to generate profits.

Comparing the ROA of Euronet Worldwide (EEFT), we see an increase from 0.0455 in 2022 to 0.0495 in 2023. This improvement signifies better asset utilization, deeming it a positive trend for potential investors. This results in adding 1 point for Euronet's ROA in the Piotroski score. Historically, while Euronet's ROA has been trailing the industry median (which was 0.715 in 2023), the upward trend is promising. Additional operational cash flow data, which has grown significantly, underscores this efficiency.

Operating Cashflow are higher than Netincome?

Operating cash flow exceeding net income is an essential indicator because it suggests that a company is generating ample cash from its operations to cover net income, thus implying a healthy cash flow position.

In 2023, Euronet Worldwide (EEFT) reported an operating cash flow of $643.1 million, significantly higher than its net income of $279.7 million. This disparity suggests a strong cash flow position as the cash generated from operations substantially covers the net income. Historically, EEFT has consistently maintained a higher operating cash flow compared to net income, which underscores ongoing operational efficiency and cash management effectiveness. For example, in 2022, the operating cash flow was $748.3 million compared to a net income of $231 million. This trend indicates a robust financial health and earns EEFT 1 point under this Piotroski criterion.

Liquidity of Euronet Worldwide (EEFT)

Leverage is declining?

Change in leverage measures the difference in a company's leverage ratio over time, analyzing its indebtedness and financial risk.

Comparing the leverage of Euronet Worldwide (EEFT) in 2022 (0.3168) to 2023 (0.3073), the leverage has decreased slightly, indicating a minor reduction in company's financial risk. Historically, leverage ratios fluctuated, peaking at 0.3659 in 2005 and reaching its lowest at 0.1073 in 2011. Given this downward trend for 2023, Euronet Worldwide could be seen as managing its debt better, which is a positive sign financially. Thus, under Piotroski's analysis, this criterion scores 1 point.

Current Ratio is growing?

Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets, indicating overall liquidity.

Comparing Euronet Worldwide's (EEFT) current ratio of 1.5414 in 2023 to 1.5831 in 2022 shows a decrease, and thus, no point is awarded in this criterion. This decline suggests a modest reduction in liquidity, though the current ratio remains fairly stable. Notably, Euronet's current ratio has, throughout the last two decades, generally trended close to the industry median, remaining competitive within its sector. For instance, in 2023, Euronet's current ratio of 1.5414 was close to the industry median of 1.5348, suggesting its liquidity position is in line with industry norms. A brief look at the historical data indicates that Euronet’s current ratio tends to fluctuate modestly around the industry median, suggesting consistent relative liquidity across the years. It's important to monitor this closely, as substantial deviations could indicate potential liquidity issues or improvements.

Number of shares not diluted?

Changes in outstanding shares directly affect the ownership structure and shareholder value. A decrease often indicates share buybacks, which can mean positive financial health or efforts to bolster shareholder value. An increase can signal capital raising which might be for future growth but dilute existing shares.

In 2022, Euronet Worldwide had 50,175,614 outstanding shares, whereas, in 2023, this number decreased to 48,482,006. This decrease in outstanding shares represents a reduction of approximately 3.37%. Historically, Euronet has seen fluctuations in its number of outstanding shares over the past 20 years. However, this recent decrease is significant because it may indicate a share buyback initiative, often a positive sign suggesting that management believes the company's stock is undervalued. Therefore, in the Piotroski analysis, Euronet Worldwide would earn 1 point in this category, reflecting strength in this financial metric.

Operating of Euronet Worldwide (EEFT)

Cross Margin is growing?

Gross Margin evaluates a company's core profitability by revealing the percentage of revenue that exceeds the cost of goods sold, thus indicating how efficiently a company uses its resources.

For Euronet Worldwide (EEFT), the Gross Margin decreased slightly from 0.3991 in 2022 to 0.3973 in 2023. While this is a marginal decline, it still results in a score of 0 for the Piotroski analysis. Here's more context: over the past 20 years, EEFT's Gross Margin has generally trended upwards, starting at 0.3446 in 2003 and peaking at 0.434 in 2019. However, when compared to the industry median, EEFT has consistently underperformed, with the industry median Gross Margin significantly higher, e.g., 0.715 in 2023.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It is crucial for assessing operational effectiveness.

In 2023, Euronet Worldwide's Asset Turnover decreased to 0.6529 from 0.662 in 2022, signifying a minor reduction in the company's efficiency in using its assets to generate revenue. Historically, Euronet’s Asset Turnover ratio reached its peak in 2013 at 0.8973, but it has generally been declining since then. The downturn from 2022 to 2023 aligns with this broader falling trend observed over the past 20 years. Consequently, this leads to a score of 0 instead of adding 1 point according to the Piotroski Analysis criterion.