Last update on 2024-06-07

Fox (FOX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Fox (FOX) using Piotroski F-Score. Check profitability, liquidity, and efficiency scores with a promising 8/9 rating for 2023.

Short Analysis - Piotroski Score: 8

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

The Piotroski F-Score assesses a company's financial position using 9 criteria related to profitability, liquidity, and efficiency. Fox (FOX) scored 8 out of 9, reflecting strong financial health with positive net income, good cash flow, rising ROA, operating cash flow surpassing net income, no share dilution, improved gross margin, and better asset turnover. However, leverage increased, and the current ratio dropped, indicating some liquidity concerns.

Insights for Value Investors Seeking Stable Income

With a high Piotroski score of 8, Fox (FOX) appears to be a strong and potentially undervalued investment. The company shows good profitability and efficiency, although investors should consider the rising leverage and decreasing current ratio. Overall, it could be worth exploring further if these factors are managed well in your investment strategy.

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

Profitability of Fox (FOX)

Company has a positive net income?

Check if the Net Income for FOX is positive which indicates profitability and adds a point according to Piotroski criteria.

Fox Corporation reported a net income of $1,239,000,000 in 2023, which is positive. According to the Piotroski scoring method, a positive net income contributes 1 point to the overall score. Over the past 20 years, Fox has demonstrated profitability in most years, despite experiencing a few years with highly fluctuating net incomes. For example, in 2013, they reported a staggering $7,097,000,000, which underscores their capability to make substantial profits. However, there have also been years with net incomes lower than $1 billion and even one year (2009) where the net income was zero. Nevertheless, the positive trend in 2023 is a favorable indicator.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is crucial as it provides insight into the liquidity and financial health of a company. Positive CFO indicates the company's ability to generate sufficient cash to maintain operations and growth.

For the fiscal year 2023, the CFO for Fox (FOX) stands at $1.8 billion. This is a positive figure, which earns Fox 1 point in the Piotroski Analysis. However, when analyzing the historical data over the past 20 years, it's observed that the CFO has fluctuated significantly, peaking at $4.471 billion in 2011 and hitting a low of $1.097 billion in 2016. Although the current CFO is positive, it represents a decline from the CFO figures of the previous two years, $2.639 billion in 2021 and $1.884 billion in 2022, showing a downward trend. This may raise concerns about sustainability and future cash flow generation potential despite meeting the Piotroski criteria positively.

Return on Assets (ROA) are growing?

One of the noteworthy factors considered in Piotroski analysis is the change in Return on Assets (ROA) which serves as a tangible measure of a company’s profitability relative to its total assets. A year-over-year increase in ROA indicates an improvement in profitability, earning 1 point in the Piotroski score. The direction and trend of ROA give explicit insights into operational efficacy and financial health.

For Fox (FOX), the increase in ROA from 0.0534 in 2022 to 0.0563 in 2023 is a promising sign. A rise in ROA indicates improved profitability and operational efficiency. Moreover, acknowledging the historical performance of the company's ROA over the past 20 years, as well as the industry median, provides context to Fox's performance. Despite the industry median fluctuating and maintaining much higher values over the two decades, FOX’s increasing ROA should be analyzed positively. Given the current environment of pulling ahead amidst market challenges, FOX earning 1 point here reinforces its potential for further financial robustness. This trend signifies a positive outlook, fostering investor confidence as it suggests FOX is managing its assets more effectively to generate earnings.

Operating Cashflow are higher than Netincome?

This criterion measures whether a company's operating cash flow exceeds its net income. It is important because it can indicate that the company's earnings are backed by actual cash flow, rather than accounting adjustments.

For Fox (FOX) in 2023, the operating cash flow was $1,800,000,000, which is higher than the net income of $1,239,000,000. This results in a point for this criterion. Having operating cash flow greater than net income is a positive trend as it suggests that the company's reported earnings are not artificially inflated and are backed by real cash inflows. In the context of the last 20 years, Fox has seen fluctuations in both operating cash flow and net income, with variable accrual rates. Still, the 2023 figures indicate a solid earnings base underscored by sound cash management.

Liquidity of Fox (FOX)

Leverage is declining?

Change in Leverage indicates the degree of a company's financing through debt rather than equity and affects financial stability.

The Leverage Ratio in 2022 was 0.3431, which increased to 0.3149 in 2023. This upward trend in leverage is unfavorable as it demonstrates a greater dependency on debt financing. Reviewing the trend over the previous years shows volatility, with spikes in 2017 at 1.8802 and heavy fluctuations throughout the last two decades. The stable or slightly declining leverage is typically indicative of a well-managed, less risky financial strategy. Therefore, we assign 0 points under the Piotroski criteria for Fox.

Current Ratio is growing?

Comparing the Current Ratio of 1.9285 in 2023 with the Current Ratio of 3.6067 in 2022. Current Ratio reveals liquidity by measuring the company's ability to pay short-term obligations.

In the year 2023, Fox's Current Ratio stood at 1.9285, a noticeable decrease from the 3.6067 in 2022. The drop in Current Ratio by 1.6782 points (or around 46.53%) is significant and suggests a decline in the firm's liquidity position. Historically, Fox's Current Ratio has fluctuated, peaking in 2020 at 3.9276, and now reclining closer to the industry median, which was 1.5175 in 2023. This declining trend in Current Ratio is unfavorable, pointing to increased challenges in meeting short-term commitments. Consequently, for this Piotroski criterion, Fox scores 0 points since the ratio decreased.

Number of shares not diluted?

This criterion evaluates the change in the number of shares outstanding in the past year and assesses whether share buybacks or issues have occurred.

The Outstanding Shares for Fox (FOX) decreased from 566,000,000 in 2022 to 529,000,000 in 2023, confirming a reduction in outstanding shares by 37,000,000. This indicates a 6.5% reduction year-over-year. Given that a decrease in outstanding shares is beneficial for existing shareholders as it signifies share buybacks, resulting in ownership concentration and often an increase in share value, the score for this criterion is 1. This reduction suggests Fox is engaging in shareholder-friendly practices like buybacks.

Operating of Fox (FOX)

Cross Margin is growing?

The criterion compares the year-over-year change in gross margin to assess improving or deteriorating operational efficiency. An increase suggests better cost management and revenue generation relative to costs.

The gross margin of FOX has increased slightly from 0.3476 in 2022 to 0.3503 in 2023, translating to a positive trend in operational efficiency. This 0.0027 or 0.27% increase, although minor, indicates an improvement in the company's cost structure and pricing strategy. Historically, FOX's gross margin shows periods of volatility but a general upward trend, pointing towards effective management actions over the years. Despite the improvement, it's notable that FOX's gross margin still lags behind the industry median of 0.4493 in 2023, reflecting scope for potential improvements. Points given for this criterion: 1.

Asset Turnover Ratio is growing?

Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue. Higher turnover is preferable as it indicates better performance.

With an increase from 0.6195 in 2022 to 0.6771 in 2023, Fox's asset turnover has improved. Reviewing data from the past 20 years, FOX had variable turnovers, with their highest recorded in 2018 at 0.8652. Recent trends show positive momentum in 2023, suggesting improved efficiency in asset utilization. This increase merits a 1 point addition for this criterion as it indicates better asset performance.