Last update on 2024-06-07

HELLA GmbH (HLE.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Read the Piotroski F-Score Analysis for HELLA GmbH (HLE.DE) in 2023. Final score: 7/9. Discover how financial criteria impact profitability and operational efficiency.

Short Analysis - Piotroski Score: 7

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

The Piotroski F-Score, ranging from 0 to 9, gauges a company's financial strength based on profitability, liquidity, and leverage. HELLA GmbH (HLE.DE) scored a 7, indicating a strong financial position. The company shows positive, growing net income, operating cash flow, and return on assets. Operating cash flow surpassing net income supports quality earnings. However, increasing leverage and a declining current ratio signal potential liquidity issues. The number of outstanding shares has been stable, but no buybacks occurred, and the gross margin and asset turnover show positive upward trends, reflecting improved operational efficiency.

Insights for Value Investors Seeking Stable Income

Given HELLA GmbH's good Piotroski Score of 7, it appears to be in a strong financial position with positive profitability indicators and a solid operational footing. However, increased leverage and a dropped current ratio are concerns. As an investor, it is worth looking into HELLA GmbH further for potential investment, with attention to how the company addresses its leverage and liquidity issues going forward.

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

Profitability of HELLA GmbH (HLE.DE)

Company has a positive net income?

Analyzing net income helps assess a company's profitability over a given period and its ability to generate earnings for shareholders.

HELLA GmbH’s (HLE.DE) net income for 2023 stands at €263,919,000, indicating a positive earnings trend. Historically, this is an improvement compared to 2022 when the net income was €181,261,000. This reversal from the significant negative value in 2020 (-€431,012,000) to consecutive positive years in 2021, 2022, and 2023 reinforces the company's recovery and growing profitability. Given the positive net income in 2023, an additional 1 point is awarded.

Company has a positive cash flow?

Cash flow from operations (CFO) indicates the amount of cash generated by a company's regular business operations. Positive CFO suggests the company is generating enough cash to maintain and grow its operations, making it a key indicator of financial health for HELLA GmbH.

For the fiscal year 2023, HELLA GmbH reported a CFO of €825,694,000. Evidently, this is a positive figure, granting the company 1 positive point per the Piotroski Score criteria. Historical data shows that HELLA GmbH's CFO has generally been positive over the last 20 years, apart from a notable dip in 2022 where it fell to €292,472,000. This resiliency in generating operating cash flow, even in the face of fluctuating performance, signifies robust operational efficiency and financial health for the company. Additionally, the significant rebound in 2023 from 2022 augurs well for the company's short-term financial outlook.

Return on Assets (ROA) are growing?

ROA (Return on Assets) indicates how effectively a company utilizes its assets to generate profit, which is crucial for assessing operational efficiency.

In 2023, HELLA GmbH's ROA increased to 0.0391 from 0.029 in 2022. This represents a positive trend in asset utilization and profitability. Notably, while HELLA's ROA shows improvement, it remains significantly lower than the industry median ROA of 0.196 in 2023. Historically, the company's operating cash flow has seen substantial fluctuations, impacting overall asset profitability. Nevertheless, the improved ROA in 2023 earns a score of 1, indicating a favorable development in this criterion.

Operating Cashflow are higher than Netincome?

Operating Cash Flow being higher than Net Income indicates strong cash-generating ability and earnings quality, showing earnings backed by actual cash flows.

In 2023, HELLA GmbH reported an Operating Cash Flow of €825,694,000, while the Net Income stood at €263,919,000. This results in a significant difference where the Operating Cash Flow is approximately 3.13 times higher than the Net Income. This trend points towards a robust cash-generating capability, indicating the company's earnings are backed by actual cash flow and thus suggesting healthier financial operations. Given this discrepancy, HELLA GmbH scores 1 point on this criterion.

Liquidity of HELLA GmbH (HLE.DE)

Leverage is declining?

Change in leverage compares the ratio of the company's total debt to its shareholders' equity over time.

In 2022, HELLA GmbH had a leverage of 0.0473, which increased to 0.119 in 2023. This signifies an increased reliance on debt financing, as leverage rose by 151.79%. Over the last 20 years, the highest leverage was 0.2698 in 2013 and the lowest was 0.0473 in 2022. Comparatively, 2023 shows a significant increase from the all-time low but remains below historical highs. This upward trend indicates a higher degree of financial risk, failing to add a point in Piotroski analysis for leverage improvement.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations. A rising current ratio usually indicates improving liquidity.

The current ratio for HELLA GmbH in 2023 is 1.401, down from 1.7206 in 2022. This represents a decrease, suggesting a worsening liquidity position. Over the last 20 years, the company's current ratio ranged from 0.0 to 2.0054, often aligning closely with the industry median. In 2023, both HELLA's current ratio and the industry median decreased, indicating broader sector challenges. Therefore, this criterion does not satisfy the Piotroski condition leading to a 0 score.

Number of shares not diluted?

The criterion measures if a company has reduced its number of outstanding shares, reflecting reduced dilution and potentially increased shareholder value.

For HELLA GmbH (HLE.DE), the outstanding shares in 2022 and 2023 remain unchanged at 111,111,112. This stability suggests no action towards reducing dilution, thus, it scores 0 points on this metric. Historically, consistent levels since 2017 imply a prudent approach, avoiding extra dilution but also no proactive share buybacks to increase shareholder value.

Operating of HELLA GmbH (HLE.DE)

Cross Margin is growing?

Gross Margin is the difference between revenue and cost of goods sold divided by revenue. It reflects how efficiently a company is producing its goods. By comparing the current Gross Margin with that of the previous year, investors can gauge if the company's production efficiency is improving.

The Gross Margin increased from 0.2307 in 2022 to 0.2528 in 2023 for HELLA GmbH. This improvement is noted as a positive trend, resulting in 1 point for this criterion. Historically, the Gross Margin has shown some variability over the past 20 years with notable dips during economic downturns. However, it's consistently above the industry's median margin (0.1960 in 2023). This indicates HELLA GmbH's relative strength in production efficiency compared to its peers.

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. It is calculated by dividing sales revenue by the total assets.

In the case of HELLA GmbH (HLE.DE), the asset turnover increased from 1.0119 in 2022 to 1.1778 in 2023. This marks a positive trend, indicating that the company has become more efficient in generating revenue from its assets over the past year. The asset turnover ratio has fluctuated over the years, peaking at 1.6141 in 2007 and bottoming out at 0.9633 in 2020. The recent increase suggests a recovery phase for the company, potentially representing an operational improvement. Thus, HELLA earns 1 point for the increase in asset turnover in the Piotroski analysis.