Last update on 2024-06-07

Bilfinger (GBF.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Discover the detailed Piotroski F-Score analysis of Bilfinger (GBF.DE) for 2023, revealing a strong financial health with a final score of 7 out of 9.

Short Analysis - Piotroski Score: 7

We're running Bilfinger (GBF.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score model helps investors figure out if a company's financial health is solid. A higher score, close to 9, means a company is in good shape. Bilfinger (GBF.DE) got a Piotroski score of 7 out of 9. Let's break that down: They scored 1 point each for having positive net income (€181.5M) and cash flow from operations (€144.8M), improved return on assets (ROA) to 5.66%, reduced leverage (0.0878), fewer outstanding shares, an increased gross margin (from 0.1014 to 0.1032), and higher asset turnover. Bilfinger missed points because their operating cashflow wasn't higher than net income and their current ratio dropped (from 1.358 to 1.2938). Overall, the company shows a strong but slightly inconsistent financial history.

Insights for Value Investors Seeking Stable Income

Bilfinger's Piotroski score of 7 indicates that it is financially healthy with some room for improvement, especially in areas like cash flow and current ratio. Investors might consider this stock, but should also keep an eye on its ability to sustain these positive trends. If these areas continue to improve, and considering the relatively high score, Bilfinger could be a good investment opportunity.

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

Profitability of Bilfinger (GBF.DE)

Company has a positive net income?

Net income is an assessment of the overall profitability of a company after all expenses are deducted from revenues. Positive net income is crucial.

Evaluating Bilfinger's net income in 2023, it stands at €181.5 million, marking a positive net income. This adds 1 point to Piotroski’s analysis. Looking at the historical trend over 20 years, Bilfinger has had fluctuating net incomes – facing negative figures in 2014 (-€71.4M), 2015 (-€488.7M), 2017 (-€88.5M), and 2018 (-€24.3M). However, the positive result in 2023 signifies a robust recovery trajectory from previous negative streaks, up significantly from €28.2M in 2022. This indicates a strong improvement in operational efficiency and cost management.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the cash a company generates from its regular business operations. It is a critical metric because it indicates whether a company has enough capital coming in to maintain or grow its operations without needing external financing.

Bilfinger's Cash Flow from Operations in 2023 is €144.8 million, which is positive. A positive CFO is favourable, as it indicates the company is generating enough cash to cover its operations. Reviewing the historical data, Bilfinger had faced fluctuations in its operating cash flow over the last 20 years. Noteworthy dips occurred in periods such as 2016 (-€347.7 million) and 2017 (-€83 million). More recent trends from 2018 onwards show a positive uptick, reaching its 2023 figure. This positive trend over the past few years, coupled with the €144.8 million figure, suggests improving business health and operational efficiency. Therefore, under this criterion, Bilfinger will be awarded 1 point.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) ratio measures how efficiently a company is using its assets to generate profit. ROA is a significant metric as it provides insight into how effectively management is turning investments into net earnings.

The Return on Assets (ROA) for Bilfinger (GBF.DE) increased significantly from 0.0091 in 2022 to 0.0566 in 2023. This notable improvement from 0.91% to 5.66% highlights more efficient utilization of the company's assets to generate profit. While a 1-point gain in the Piotroski analysis is determined, it is also crucial to benchmark this against the industry median ROA, which as of 2023, sits at approximately 23.89%. Though the improvement is positive, Bilfinger still lags significantly behind its peers in terms of ROA performance. Therefore, the trend is favorable but suggests there is room for further improvement.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) being higher than Net Income is a sign that a company is generating strong cash flows from its core operations, which is crucial for sustaining business activities and growth. This criterion assesses the quality of earnings.

For Bilfinger (GBF.DE), the Operating Cash Flow in 2023 was €144.8 million, whereas the Net Income was €181.5 million. This results in a score of 0 because the Operating Cash Flow is lower than the Net Income. This scenario might raise concerns about the quality of earnings, as the company is not generating as much cash flow from operations relative to its net income. Over the past 20 years, the Operating Cash Flow has fluctuated significantly, peaking at €403.9 million in 2010 and dipping to negative values in 2016 and 2017. Comparing it to historical performance, 2023 doesn't stand out as particularly strong or weak but maintaining a positive cash flow is essential. However, consistency would be favorable to ensure operational stability.

Liquidity of Bilfinger (GBF.DE)

Leverage is declining?

Change in leverage measures a company's ability to service its debt. Lower leverage usually indicates lower financial risk.

Bilfinger's leverage increased from 0.1274 in 2022 to 0.0878 in 2023, indicating a positive trend as lower leverage typically signifies reduced financial risk. However, historical data shows fluctuating leverage, with highs in 2019 (0.1643) and consistent declines thereafter. This decreasing leverage in 2023 (0.0878) is a favorable trend (add 1 point).

Current Ratio is growing?

Current Ratio is a crucial metric to measure a company's ability to pay off its short-term liabilities with its short-term assets. It is important as it provides insight into the liquidity position of a company and its operational efficiency.

Bilfinger's Current Ratio decreased to 1.2938 in 2023 from 1.358 in 2022. This represents a decline and therefore, we cannot assign a point for this criterion. When compared to the industry's median Current Ratio of 1.2511 in 2023, Bilfinger is still above the median, indicating a relatively better liquidity position despite the decrease. Historically, Bilfinger has shown fluctuations in its Current Ratio, with it being significantly higher in certain years, such as 2016 and 2020. However, this decreasing trend in the most recent year is not indicative of a strong liquidity improvement.

Number of shares not diluted?

Change in Shares Outstanding indicates shifts in company's capital structure and is closely observed by investors.

The Outstanding Shares of Bilfinger had a shift from 39619128 in 2022 to 37462377 in 2023. This clearly shows a decrease, and hence it fulfills one of Piotroski's criteria and earns a score of 1 point. This decrease in shares outstanding is generally positive as it suggests potential share buyback or reduction in shares, signaling management's confidence and potential for increased earnings per share.

Operating of Bilfinger (GBF.DE)

Cross Margin is growing?

Gross margin reflects the financial health of a company, indicating the difference between revenue and cost of goods sold relative to revenue.

Comparing Bilfinger's gross margin of 0.1032 in 2023 with 0.1014 in 2022, it has increased slightly, earning 1 point in the Piotroski Analysis. This positive change, although marginal, indicates a small improvement in cost management or pricing power. Additionally, when examining a historical context, Bilfinger's gross margin has seen significant fluctuations over the past two decades. While the recent increase is a good sign, the company has generally lagged behind the industry median, which stands at 0.2389 for 2023. Hence, although the immediate trend is positive, Bilfinger still has substantial room to improve its competitiveness in gross margin terms compared to industry standards.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales, calculated as Sales divided by Average Total Assets. A rising ratio indicates improved efficiency.

When comparing the asset turnovers of 1.3997 in 2023 and 1.3908 in 2022 for Bilfinger, we observe a slight increase. This uptick from 1.3908 to 1.3997 suggests a marginal improvement in how efficiently Bilfinger is deploying its assets to generate revenue. According to a 20-year historical performance chart, Bilfinger's asset turnover fluctuated significantly over the years, reaching its peak around 2006 and its lowest in 2016. Despite the two most recent yearly improvements, they are still below the earlier highs. This modest rise contributes a score of 1 point in the Piotroski analysis, reflecting positively on Bilfinger's asset management capabilities.