Last update on 2024-06-06

Gilead Sciences (GILD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

In-depth Piotroski F-Score analysis for Gilead Sciences (GILD) in 2023, revealing strengths in profitability, liquidity, and efficiency with a score of 7/9.

Short Analysis - Piotroski Score: 7

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

Gilead Sciences (GILD) has been evaluated using the Piotroski F-Score, which ranges from 0 to 9 and is designed to assess the financial health of a company. GILD scored a 7 out of 9 in the analysis. This score suggests that Gilead has strong profitability, good liquidity, and operational efficiency, though there are areas for improvement. Gilead had a positive net income and cash flow, and saw increases in their return on assets, operating cash flow compared to net income, current ratio, share buybacks, and asset turnover ratio. However, the company did see a decrease in its gross margin and increased leverage, which are areas of concern.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski score analysis, Gilead Sciences (GILD) appears to be a strong candidate for investment due to its robust financial health, indicated by a score of 7 out of 9. The company demonstrates solid profitability and liquidity, making it a relatively safe investment. However, potential investors should take note of the declining gross margin and rising leverage, which could pose risks. It’s recommended to monitor these factors closely and consider these elements in your investment decision.

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

Profitability of Gilead Sciences (GILD)

Company has a positive net income?

Net income is a vital indicator of a company’s profitability and overall financial health. By having a positive net income, it demonstrates the firm’s capability to generate sufficient earnings from its operations.

In 2023, Gilead Sciences (GILD) reported a net income of $5,665,000,000. This net income is positive, which is a favorable indicator, reflecting the company’s consistent operational profitability. Analyzing the historical data over the last 20 years shows that Gilead has maintained a trend of positive net income for nearly two decades, barring a few anomalous years like 2003 and 2006 when the net income was negative. Notably, 2014 was an exceptional year with a net income of $12.1 billion, likely influenced by product successes or exceptional sales, underscoring the company’s potential for high profitability. Therefore, considering the positive net income in 2023, Gilead earns a point for this criterion.

Company has a positive cash flow?

This criterion checks whether the company's Cash Flow from Operations (CFO) is positive, indicating a healthy capacity to generate cash.

The CFO for Gilead Sciences (GILD) in 2023 is $8,006,000,000, which is positively significant. Historically, the company has shown a robust ability to generate operating cash flow, reflected in its positive values for the past 20 years. This consistent positive trend is a good sign of financial health and operational efficiency. Notably, after the peak in 2015 with $20.3 billion, the CFO values have slightly declined yet remained solid. Therefore, for 2023, Gilead Sciences earns 1 point for this positive CFO.

Return on Assets (ROA) are growing?

Change in ROA measures the change in return on assets from one period to another, indicating the company's efficiency in generating returns from its assets. It is an important indicator of financial health.

Gilead Sciences' return on assets (ROA) increased from 0.07 in 2022 to 0.0904 in 2023. This increase is a positive sign, earning the company an extra point in the Piotroski score. Over the past 20 years, Gilead's ROA has shown fluctuations, with significant peaks in years such as 2014 and lower values in recession years like 2020. The company's operating cash flow has also varied widely, with peaks in 2014 and robust figures in the early 2020s. When compared to the industry median ROA, which ranged from 0.7267 to 0.7483 over the past 20 years and remained fairly stable, Gilead's ROA displays more volatility. Despite this volatility, the recent increase in 2023 is noteworthy and indicative of improving efficiency and profitability for Gilead Sciences.

Operating Cashflow are higher than Netincome?

Operating Cash Flow being higher than Net Income is significant.

In 2023, Gilead Sciences reported an Operating Cash Flow of $8,006,000,000 compared to a Net Income of $5,665,000,000. This is a favorable trend as it indicates strong cash generation capabilities. Over the past 20 years, GILD has demonstrated a consistent ability to produce solid cash flow, peaking at $20,329,000,000 in 2015. The trend remains positive, making the company more financially flexible and less reliant on external financing.

Liquidity of Gilead Sciences (GILD)

Leverage is declining?

Change in Leverage examines how a company's financial leverage has evolved over time. Keeping track of leverage is crucial as rising leverage can indicate higher financial risk, while decreasing leverage shows improved financial stability.

In 2023, Gilead Sciences (GILD) recorded a leverage of 0.3733, slightly up from 0.3634 in 2022. This increase in leverage suggests that Gilead has taken on more debt relative to its equity, which could be a marker of higher financial risk. Historically, Gilead's leverage has been quite volatile, fluctuating significantly over the past 20 years. Notably, it reached a peak in 2016 at 0.4624 before tapering down. The latest increment sets the Piotroski score for this criterion to 0, indicating a negative trend under this analysis parameter.

Current Ratio is growing?

The Piotroski Score's assessment of the Current Ratio is essential to evaluate the short-term financial stability and liquidity of a company.

In 2023, Gilead Sciences (GILD) reported a Current Ratio of 1.426, up from 1.2852 in 2022. This improvement of 11% signifies better liquidity, adding to their ability to cover short-term obligations. Historically, Gilead's Current Ratio has fluctuated, peaking in 2004 at 7.2979 and bottoming out in 2013 at 1.1499. While still below the industry's median in recent years, this upward trend is promising and adds 1 point to the Piotroski Score.

Number of shares not diluted?

Decrease in shares outstanding is an indicator of stock buybacks, demonstrating management's confidence.

Between 2022 and 2023, outstanding shares of Gilead Sciences (GILD) decreased from 1,255,000,000 to 1,248,000,000. This reduction of 7,000,000 shares is a positive trend. Over 20 years, GILD's share count has generally trended downward, peaking in 2007 at 1,928,712,000 and reducing consistently, reflecting management's ongoing effort to buy back shares. This trend is beneficial as it typically signals management's confidence in the company's valuation and rewards shareholders through potentially higher earnings per share (EPS). Thus, by the Piotroski score criteria, GILD earns 1 point.

Operating of Gilead Sciences (GILD)

Cross Margin is growing?

Gross Margin measures the proportion of revenue that exceeds the cost of goods sold. It's crucial as it indicates the core profitability of a company before other expenses are deducted.

In 2023, Gilead Sciences (GILD) reported a Gross Margin of 0.7604, compared to 0.7926 in 2022. This represents a decrease in Gross Margin, implying lower core profitability. Over the past 20 years, Gilead's Gross Margin has mostly been higher than the industry's median, emphasizing a competitive edge. However, the drop in 2023 suggests challenges in maintaining profitability levels amidst potential rising costs or declining prices. Thus, for Change in Gross Margin for 2023, Gilead receives 0 points.

Asset Turnover Ratio is growing?

Asset turnover is an efficiency ratio that measures a company's ability to generate sales from its assets. A higher turnover typically implies better utilization of company assets.

In 2023, Gilead Sciences recorded an asset turnover of 0.4328, an improvement from 0.4161 in 2022. This positive change signifies more effective utilization of assets to generate sales. Over the past two decades, Gilead’s asset turnover has shown fluctuations, peaking at 0.8709 in 2014 and reaching its lowest at 0.3304 in 2018. The increase from 2022 to 2023 is a positive trend, adding 1 point in Piotroski's scoring system. This is beneficial as it indicates improving operational efficiency. However, it’s still below historical highs, indicating room for continued improvement.