Last update on 2024-06-07

Geron (GERN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Understand Geron Corporation's (GERN) Piotroski F-Score for 2023. Analyze its profitability, liquidity, and operational efficiency. Final score: 6/9.

Short Analysis - Piotroski Score: 6

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

Geron (GERN) was evaluated against the Piotroski F-Score, obtaining a score of 6 out of 9. This score reflects the overall health of their financials, including profitability, liquidity, and efficiency. Out of nine criteria, Geron exhibited positive trends in only six, such as improvements in ROA, operating cash flow, current ratios, and gross margin. However, significant challenges remain, like persistent negative net incomes, negative cash flow from operations, high leverage, and declining asset turnover.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 6, Geron (GERN) demonstrates potential for investment, albeit with notable risks. Interested investors should delve deeper into areas of concern, mainly profitability issues and high leverage, before making decisions. It's advisable to monitor the company's financial metrics over time to see if improvements are sustained, as the mixed indicators suggest both growth potential and volatility.

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

Profitability of Geron (GERN)

Company has a positive net income?

Net income measures a company's profitability. It indicates whether a company is generating enough revenue to cover its expenses and costs.

Based on the net income data of Geron Corporation (GERN) over the last 20 years, it is evident that the company has consistently struggled with profitability. In 2023, Geron reported a net income of -$184,127,000, which is significantly negative. Examining this 20-year trend, Geron had only one year (2015) where its net income was marginally positive ($46,000). This persistent trend of negative net incomes indicates substantial ongoing challenges in achieving profitability. Therefore, Geron does not meet this particular criterion of the Piotroski analysis, scoring 0 points for 2023. This criterion is crucial as positive net income is a fundamental measure of financial health and sustainability for any corporation.

Company has a positive cash flow?

Cash Flow from Operations (CFO): Check if CFO are positive or negative. If the CFO is positive, add 1 point if not, set it to 0.

The cash flow from operations (CFO) for Geron in 2023 stands at -$167.74 million, indicating a negative cash flow. This must be compared to the positive benchmark to understand Geron's earnings quality and financial flexibility. Negative CFO suggests potential difficulties in covering operational costs and hinders flexibility in reinvesting in business growth or returning value to shareholders. Over the last 20 years, Geron's CFO has frequently been negative. Particularly from 2012 onwards, the cash flow trends reveal substantial increasing outflows each year. This sustained negative trend deteriorates the company’s ability to finance its growth from internal resources and heightens dependency on external financing, which may impose additional cost pressures.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) for Geron (GERN) and its significance.

The ROA of Geron (GERN) for 2023 is -0.6299, compared to -0.6812 in 2022. This increment in ROA indicates a slightly improved utilization of assets in 2023 to generate earnings compared to the prior year. Assigning a point of 1 as ROA increased in 2023. Importantly, the last 20 years data shows a company generally struggling with very negative ROA figures, far below the industry median, which consistently shows positive ROA ranging above 0.4. The long term performance trend compared to industry standards suggests that while there's a minor improvement in 2023, Geron is operating on fundamental asset efficiency problems, posing questions on its competitiveness and financial management.

Operating Cashflow are higher than Netincome?

Operating cash flow should be higher than net income.

For fiscal year 2023, Geron (GERN) shows an operating cash flow of -$167.74 million and a net income of -$184.13 million. Since the operating cash flow is higher than net income, it demonstrates that the company is able to generate more cash than its Accounting Income suggests, which is positive. As per the Piotroski F-score, this criterion will receive 1 point.

Liquidity of Geron (GERN)

Leverage is declining?

Leverage is a measure of how much debt a company is using to finance its assets. It's important as high leverage increases risk.

The leverage for Geron has increased from 0.1778 in 2022 to 0.0966 in 2023. When analyzing the long-term trend, we see leverage has greatly varied, peaking at 0.2393 in 2021 and decreasing significantly afterward. However, in accordance with the latest annual comparison, since the leverage increased, it results in a score of 0. Maintaining controlled leverage is vital, as high debt levels can lead to financial instability. As observed recently, Geron's leverage is relatively low following a significant decrease, signaling prudent debt management, yet a yearly increase must be monitored.

Current Ratio is growing?

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

The Current Ratio of Geron (GERN) has increased from 2.3502 in 2022 to 3.1586 in 2023. This rise indicates an improvement in the company's ability to cover short-term liabilities with its short-term assets. Historically, Geron's Current Ratio has shown considerable variability, but the company had maintained higher ratios in previous years such as 21.9915 in 2018 and double digits in previous early 2000s. Comparing the 2023 ratio to the industry median of 5.7831, Geron's Current Ratio is still below the industry standard, yet the positive trend from 2022 to 2023 suggests a strengthening liquidity position. The upward trend is favorable and thus, adds 1 point in the Piotroski Analyses.

Number of shares not diluted?

The criterion assesses whether there has been a decrease in the number of outstanding shares, indicating potential share buybacks. A decrease is often considered positive as it could imply a company is confident in its future.

Geron Inc. has seen a dramatic reduction in its outstanding shares from approximately 380.8 million in 2022 to none in 2023. Typically, a decrease is favorable in the Piotroski Score, adding a point to the overall score. Interestingly, the historical data also displayed fluctuating share levels, peaking in 2022 before the entire reduction in 2023, implying potential share buybacks or a significant restructuring.

Operating of Geron (GERN)

Cross Margin is growing?

The criterion pertains to the evaluation of a company's gross margin from one period to the next, specifically to assess if there has been an improvement. Tracking changes in gross margin is vital as it reflects the company's core profitability. A higher gross margin means the company retains more revenue after incurring direct costs associated with producing goods or services, which can be reinvested into the company's growth or returned to shareholders.

In 2023, Geron reported a gross margin of 0, whereas in 2022, the gross margin was a significantly negative -157.1611. This stark improvement to break-even territory is a positive trend for the company. To put this into a historical perspective, over the last 20 years, Geron's gross margins have fluctuated but largely remained non-existent or negative, especially during the last five years where margins suffered steep declines, touching -196.834 in 2020. Comparatively, the industry median gross margin has consistently been positive, such as 0.4518 in 2023. Thus, assigning 1 point for the gross margin increase in 2023 is justified. However, the company still lags substantially behind the industry median, indicating there is much room for improvement.

Asset Turnover Ratio is growing?

Asset Turnover evaluates how efficiently a company uses its assets to generate sales, calculated as sales divided by average assets.

In the case of Geron (GERN), the Asset Turnover ratio has decreased from 0.0029 in 2022 to 0.0008 in 2023. This represents a significant decline, which is a negative indication. The 2023 Asset Turnover ratio is nearly one-fourth of the 2022 figure, indicating that the company has become substantially less efficient in using its assets to generate sales. Historically, the company has seen fluctuating Asset Turnover ratios with a high of 0.2264 in 2015 and varying degrees of decline since then. This declining trend, particularly the substantial drop from 2022 to 2023, reflects poor asset utilization and adds a risk factor for investors. Therefore, Geron scores 0 on this criterion.