Last update on 2024-06-07

Exelixis (EXEL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Exelixis (EXEL): Final Piotroski F-Score for 2023 is 6/9. Detailed analysis on profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 6

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

Exelixis (EXEL) scored a 6 out of 9 on the Piotroski F-Score, indicating a reasonably strong financial position. The analysis reveals positive net income and cash flow, strong earnings quality, and improvement in return on assets and asset turnover. However, there are concerns due to decreasing liquidity, declining gross margin, and slight increase in leverage over the past year. These mixed factors paint a picture of a financially solid but not exceptional company in 2023, especially within the volatile biotech industry.

Insights for Value Investors Seeking Stable Income

Given the Piotroski F-Score and other financial insights, Exelixis (EXEL) appears to be a stable stock with some growth potential. The positives like solid profitability and operational cash flow are encouraging, but investors should remain cautious due to issues with liquidity and slight debt increase. It may be worth a deeper dive or more frequent monitoring if you decide to invest, particularly considering the competitive nature of the biotech sector.

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

Profitability of Exelixis (EXEL)

Company has a positive net income?

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

The net income for Exelixis (EXEL) in 2023 is $207.765 million, which is positive. Over the past 20 years, Exelixis has experienced significant fluctuation in its net income. Notably, the company reported negative net income for consecutive years from 2003 to 2012. However, since 2013, it has shown a remarkable turnaround with a trend of positive net income, except for the year 2014. This resurgence in profitability indicates effective cost management and revenue growth. Adding 1 point for positive net income is justified, reflecting robust financial health.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash a company generates from its regular business operations. Positive CFO is critical as it shows that the company is able to generate sufficient revenue from its core business activities, ensuring operational stability.

The Cash Flow from Operations (CFO) for Exelixis (EXEL) in 2023 is $333,324,000. This number is positive, which adds 1 Piotroski point to the company's score. Historical data indicates that EXEL's CFO has generally shown a trend towards improvement, particularly starting from 2015 with a significant positive shift. From $206,296,000 in 2016, the CFO peaked at $526,956,000 in 2019 before slightly dropping over the subsequent years. The positive CFO in 2023 reinforces the idea that EXEL has managed to maintain operational efficiency despite fluctuations in an inherently volatile biotech market. This consistent generation of operating cash flow bodes well for the company's financial health.

Return on Assets (ROA) are growing?

Change in ROA measures the company's profitability relative to its assets, indicating how effectively its management is utilizing assets to generate earnings. It shows if the company is becoming more efficient at using its assets.

The Return on Assets (ROA) for Exelixis (EXEL) increased from 0.0641 in 2022 to 0.0691 in 2023, adding 1 point to its score. This increase of 0.005 suggests a positive trend, reflecting improved efficiency in utilizing assets to generate earnings. Comparing to the industry median ROA, which stands significantly higher at 0.4518 in 2023, Exelixis still trails behind industry peers. Over 20 years, the company has seen fluctuations in its operating cash flow but has generally improved, despite not matching the industry median ROA. This sustained underperformance relative to the industry emphasizes the need for continuous operational enhancements.

Operating Cashflow are higher than Netincome?

Operating cash flow higher than net income is a measure of earnings quality, indicating that the company is generating real cash, not just accounting profits.

For Exelixis (EXEL) in 2023, the operating cash flow stands at $333.32 million, significantly surpassing its net income of $207.77 million. This metric earns Exelixis 1 point in Piotroski's analysis, signaling robust earnings quality. Historically, Exelixis has exhibited fluctuating cash flows, but the current figures demonstrate strong operational efficiency. This positive trend in cash generation relative to net income suggests that the company’s earnings are backed by real cash inflows, enhancing investor confidence. This is particularly important for pharmaceutical companies like Exelixis, which often face volatility due to R&D expenditures and variable revenue streams.

Liquidity of Exelixis (EXEL)

Leverage is declining?

Leverage refers to the proportion of debt financing a company uses compared to its equity. Ideally, lower leverage indicates a lower debt burden.

The leverage ratio for Exelixis in 2022 was 0.0619, which increased to 0.0646 in 2023. This indicates an increase in leverage and a higher debt proportion. Comparing this trend over the past 20 years, we note that the company has continually reduced its leverage from higher levels around the 2000s where it peaked at 1.1477 in 2015. This recent uptick, although nominal from 0.0619 to 0.0646, thus suggests a change after a period of stable, lower leverage. Consequently, this criterion points to a negative trend, resulting in a score of 0.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations or those due within one year.

Exelixis' Current Ratio has decreased from 4.9906 in 2022 to 3.3427 in 2023. This suggests a worsening liquidity position. Compared to the industry median of 5.7831 in 2023, Exelixis is underperforming. Adding no points for this Piotroski criterion.

Number of shares not diluted?

Change in Shares Outstanding assesses whether a company is issuing more shares, which might dilute the value of existing shares or signal capital raises.

Based on the provided numbers, Exelixis' outstanding shares have decreased slightly from 321,526,000 in 2022 to 318,151,000 in 2023. This reduction indicates a slight buyback or reduced issuance, garnering a score of 1 under Piotroski criteria. Historically, from 2003 to 2023, the shares outstanding show a general upward trend, swelling from 65,387,000 in 2003 to a peak of 321,526,000 in 2022. This long-term increase reflects substantial growth, probably associated with substantial capital investments and expansions, but the recent drop is a positive indicator for shareholders in the immediate term.

Operating of Exelixis (EXEL)

Cross Margin is growing?

The Piotroski score assesses a company's financial strength based on various metrics. One such metric is the change in Gross Margin. A higher Gross Margin can indicate better control over production costs relative to revenues.

In 2023, Exelixis (EXEL) reported a Gross Margin of 0.9604, compared to 0.9641 in 2022. This represents a slight decrease in Gross Margin, resulting in no points being added under this specific Piotroski criterion. Evaluating this within the industry context, the 20-year Gross Margin for Exelixis indicates a largely stable performance with minor fluctuations. Comparatively, the industry median Gross Margin has seen more variability and generally lower figures, peaking at 0.821 in 2013 and hitting a low of 0.4518 in 2023. Despite the minor dip in Exelixis' Gross Margin from 2022 to 2023, the company still significantly outperforms the industry median, underscoring its effective cost control and competitive positioning.

Asset Turnover Ratio is growing?

Asset Turnover is calculated as net sales divided by average total assets; it measures a company's efficiency at using its assets to generate sales.

In 2023, Exelixis (EXEL) had an Asset Turnover of 0.6087 compared to 0.5665 in 2022. This represents an improvement in asset utilization, indicating higher efficiency in generating sales from its assets. Considering the point system of the Piotroski F-Score, this positive change adds 1 point. Historically, EXEL's Asset Turnover has exhibited significant fluctuation. The recent increase aligns positively, especially compared to past low years like 2012 with an exceptionally low ratio of 0.0852. Therefore, this rise is favorable.