Last update on 2024-06-06

Expeditors International of Washington (EXPD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Expeditors International of Washington (EXPD) scores 5/9 on the 2023 Piotroski F-Score, analyzing profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 5

We're running Expeditors International of Washington (EXPD) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Expeditors International of Washington (EXPD) has a Piotroski F-Score of 5, indicating a moderate financial position. Out of the 9 criteria, the company scored well in net income, cash flow, positive operational cash flow, and share dilution. However, it showed declines in return on assets, leverage, current ratio, and asset turnover ratio, reflecting challenges in operational efficiency and financial risk management.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, EXPD exhibits both strengths and weaknesses. The company demonstrates strong profitability and cash generation abilities, as well as a shareholder-friendly approach with share buybacks. Nevertheless, the declines in operational efficiency and increasing leverage are concerning. It might be worth considering for investment if you are confident in the company's ability to address these issues and improve its financial health. Otherwise, it might be prudent to monitor its performance further before making a decision.

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

Profitability of Expeditors International of Washington (EXPD)

Company has a positive net income?

Net income is a crucial criterion in financial analysis, determining a company's profitability.

For the fiscal year 2023, Expeditors International of Washington (EXPD) reported a net income of $752,883,000. This value is positive, adding one point to our Piotroski F-Score for the profitability segment. Analyzing the historical data, we observe a positive trend in net income over the last 20 years, signifying consistent growth in profitability. Despite a notable peak in 2021 with a net income of $1,415,492,000, the dip to $752,883,000 in 2023 still remains significantly above average when considering the broader 20-year horizon, thus maintaining investor confidence.

Company has a positive cash flow?

The cash flow from operations (CFO) measures the amount of cash a company generates from its regular business activities. Positive CFO indicates that a company can cover its operating expenses and invest in its growth.

For Expeditors International of Washington (EXPD), the cash flow from operations (CFO) in 2023 was $1,053,191,000, which is positive. This gives 1 point in the Piotroski analysis. Historically, the CFO has been consistently positive over the past 20 years, showcasing the company's strong ability to generate cash from its operations. For instance, in 2021, the CFO peaked to $2,129,675,000, demonstrating exceptional cash generation capabilities. This continuous positive CFO trend is a very good indicator of the company's financial health and operational efficiency.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures the efficiency with which a company uses its assets to generate earnings. An increase signals improved operational efficiency.

In comparing the ROA of Expeditors International of Washington (EXPD) from 2022 to 2023, it is evident that there was a decrease from 0.2057 to 0.1489. This indicates a reduction in efficiency as the company is earning less on its asset base than it did the previous year. Furthermore, the industry median ROA for 2023 is 0.1817, which places EXPD below the industry standard, potentially highlighting some operational challenges. Due to this decrease, EXPD earns 0 points in this criterion. In a broader context, reflecting over the past two decades, EXPD has seen ROA fluctuations with peaks and valleys but maintains an average that has periodically matched or bettered the industry's median. However, the recent downturn is a point of concern that requires further strategic reassessment to rejuvenate its asset efficiency.

Operating Cashflow are higher than Netincome?

This criterion assesses if a company's Operating Cash Flow is higher than its Net Income, which indicates efficient cash generation from core business operations, free from accounting adjustments.

For Expeditors International of Washington (EXPD) in 2023, the Operating Cash Flow was $1,053,191,000, whereas the Net Income was $752,883,000. Since the Operating Cash Flow exceeds Net Income, this signifies a positive trend, highlighting the company's robust ability to generate cash from its operations beyond the accounting income. This adds 1 point according to the Piotroski Analyses. Charting the last 20 years: - Operating Cash Flow: variations from $114,335,000 in 2003 peaked at $2,129,675,000 in 2021, showing consistent growth besides minor fluctuations. - Net Income: growth from $121,952,000 in 2003 to $1,415,492,000 in 2021 before settling at $752,883,000 in 2023. - Accruals: a rise to 0.3809 in 2021 before decreasing to 0.2328 in 2023, suggesting a manageable level of non-cash accounting adjustments relative to earnings. A higher Operating Cash Flow compared to Net Income stands out positively for EXPD's cash generation efficiency from core activities.

Liquidity of Expeditors International of Washington (EXPD)

Leverage is declining?

Change in leverage assesses how a company's debt levels have shifted relative to its equity, indicating the firm's financial risk.

The leverage for Expeditors International of Washington (EXPD) increased from 0.0756 in 2022 to 0.0946 in 2023, which translates to an upward movement, meaning their financial leverage has worsened by 0.0190. Typically, increase in leverage suggests that the company is financing more of its operations through debt. Over the past 20 years, leverage was particularly low (0.0884) in 2019, further decreasing to 0.0507 by 2021. However, the recent trend shows an increase, reflecting an elevated financial risk and warrants close observation to determine if the high leverage may adversely affect the company’s financial stability. Therefore, according to the Piotroski Analysis criteria, EXPD scores 0 points here due to the negative trend of increasing leverage.

Current Ratio is growing?

Current Ratio measures a company's ability to pay its short-term liabilities with its short-term assets. A ratio greater than 1 indicates that the company has more assets than liabilities.

The Current Ratio of Expeditors International of Washington (EXPD) decreased from 2.1996 in 2022 to 2.0155 in 2023. This indicates a slight deterioration in the company's short-term liquidity position. Although still above 1 and hence suggesting sufficient coverage of short-term obligations, it is nevertheless a reduction. Reviewing historical data for context, the lowest Current Ratio over the last 20 years was 1.7806 in 2021, while the highest was 2.8724 in 2011. Comparatively, the industry median Current Ratio has generally been below EXPD's ratio; in 2023, it stands at 1.1884. Thus, despite the decrease, EXPD's liquidity is considerably stronger than its industry peers.* Since the Current Ratio decreased, zero points are allocated for this criterion.

Number of shares not diluted?

The Change in Shares Outstanding criterion evaluates whether a company is diluting or concentrating its equity. A decrease in outstanding shares is often viewed positively as it implies share buybacks, which can signal management's confidence in the company's value and prospects.

The Outstanding Shares for Expeditors International of Washington (EXPD) have decreased significantly from 163,010,000 in 2022 to 149,141,000 in 2023. This reduction of approximately 13.2% in the number of shares is a positive indicator. Share buybacks, which lead to fewer outstanding shares, often reflect management's belief in the intrinsic value of the company and commitment to returning value to shareholders. Historically, the company has often demonstrated a trend of reducing its outstanding shares, particularly in recent years, moving from 218,003,086 shares in 2003 to 149,141,000 shares in 2023. This concentration of equity immensely benefits existing shareholders, boosting their ownership stakes and potentially enhancing share value and earnings per share (EPS). Consequently, this trend merits a score of 1 according to the Piotroski analysis criteria.

Operating of Expeditors International of Washington (EXPD)

Cross Margin is growing?

Gross Margin is a measure of a company's financial health and reveals how efficiently it is producing its goods and services relative to its revenues.

For Expeditors International of Washington (EXPD), the Gross Margin has increased from 0.1272 in 2022 to 0.1339 in 2023. This represents an improvement, gaining 1 point in the Piotroski Score. This increase is a positive trend as it indicates better cost management and pricing strategies by the company. Considering historical data, EXPD's Gross Margin peaked at 0.3606 in 2005, but has generally followed a declining trend until stabilizing in recent years. The 2023 Gross Margin also exceeded the 2023 industry median of 0.1817

Asset Turnover Ratio is growing?

The asset turnover ratio measures the efficiency of a company in using its assets to generate sales. Higher asset turnover indicates better performance.

In 2023, Expeditors International of Washington (EXPD) witnessed a decline in its asset turnover ratio to 1.839 from 2.5865 in 2022. This reflects a decrease in efficiency in using its assets to generate sales. When observing the trend over the last 20 years, it is evident that while EXPD has experienced fluctuations, the 2023 ratio marks a significant drop even below the ratios from post-2009 recession (1.8498 in 2009) times. Given the Piotroski scoring model, EXPD scores 0 for this criterion, as a declining asset turnover ratio denotes less efficient use of assets.