Last update on 2024-06-07

Hooker Furnishings (HOFT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 1/9)

Discover the 2023 Piotroski F-Score analysis of Hooker Furnishings (HOFT), revealing a challenging year with critical insights into profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 1

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

The Piotroski F-Score evaluates companies on a scale of 0 to 9 based on their financial health. Hooker Furnishings (HOFT) was assessed using criteria such as profitability, liquidity, and operational efficiency. Unfortunately, HOFT scored a 1 out of 9, indicating a weak financial position. Key points include: negative net income and cash flow from operations, declining return on assets, increased debt (leverage), slightly decreasing current ratio, share dilution, lower gross margin, and reduced asset turnover.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 1, Hooker Furnishings (HOFT) appears to be struggling financially. The low score indicates issues with profitability, liquidity, and efficiency. Therefore, it may not be a favorable investment at this time. Potential investors might want to look for companies with higher Piotroski scores, which indicate stronger financial health and potentially better returns.

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

Profitability of Hooker Furnishings (HOFT)

Company has a positive net income?

Assessing the net income of a company is crucial as it represents the company's ability to generate profit after all expenses, taxes, and costs have been deducted from total revenue.

The net income for Hooker Furnishings (HOFT) in 2023 is -$4,312,000, which is negative. This results in 0 points for this criterion under the Piotroski Analysis. Considering the historical net income data over the last 20 years, the year 2023 marks one of the few occasions where the company recorded a negative net income. Other instances include 2021 with -$10,426,000. This negative trend is unfavorable for investors as it signals that the company is currently experiencing financial hardships or inefficiencies that prevent it from being profitable.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the cash a company generates from its regular business operations. This criterion is vital as it shows if the core operations are bringing in cash, which indicates financial health.

For Hooker Furnishings (HOFT), the CFO for 2023 is -$21,718,000, which is negative. This negative cash flow suggests that the company is spending more in its regular operations than it is generating, which can be concerning for investors. Over the last 20 years, HOFT has had fluctuating CFOs, with some years in the negative, such as -$16.038 million in 2011 and -$3.333 million in 2013, indicating volatility in its cash-generating ability. As the CFO for 2023 is negative, this criterion scores 0 points.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures how effectively a company is utilizing its assets to generate earnings. Increasing ROA signifies better asset efficiency.

The ROA of Hooker Furnishings (HOFT) decreased from 0.0322 in 2022 to -0.0114 in 2023. This indicates a decline in asset efficiency and earning potential. Historically, for the last 20 years, Hooker Furnishings has shown variability in its operating cash flow, such as a significant negative spike in 2023, potentially contributing to the negative ROA. Compared to the industry's median ROA, which remains relatively stable around 0.3496 in 2023, HOFT's performance appears weak. Therefore, for this Piotroski criterion, the score is set to 0, indicating no improvement in ROA.

Operating Cashflow are higher than Netincome?

Checks if Operating Cash Flow is higher than Net Income, a positive indicator of earnings quality.

In 2023, Hooker Furnishings (HOFT) displayed an Operating Cash Flow of -$21,718,000, substantially lower than its Net Income of -$4,312,000. This results in a score of 0 for this criterion. Historically, the company's cash flow from operations has shown significant fluctuation over the past two decades but has generally trended positively, particularly before 2020. Notably, there were years like 2018 and 2021 when the company recorded strong positive cash flows, $27,746,000 and $68,263,000 respectively. The dramatic negative turn in 2023 is a cause for concern, suggesting operational inefficiencies or adverse external conditions affecting the company's cash-generating capability.

Liquidity of Hooker Furnishings (HOFT)

Leverage is declining?

Change in Leverage compares the financial leverage between two periods to assess a company's use of debt. A lower leverage ratio signifies decreased financial risk and a stronger balance sheet.

For Hooker Furnishings (HOFT), the leverage ratio increased from 0.1243 in 2022 to 0.227 in 2023, marking a significant rise. Over a 20-year span, the leverage for 2023 is notably higher compared to previous years except for 2015 and 2016 when leverage was essentially zero. This increasing trend in leverage suggests that HOFT is taking on more debt relative to its equity. Consequently, this fails to earn a point in the Piotroski score for reduced leverage, highlighting a potentially concerning rise in financial risk.

Current Ratio is growing?

A Current Ratio compares a company's current assets to its current liabilities and gauges its short-term liquidity. An increasing Current Ratio is favorable as it indicates an improving capacity to pay off short-term obligations.

The Current Ratio for Hooker Furnishings (HOFT) has decreased slightly from 3.99 in 2022 to 3.74 in 2023. This indicates a minor deterioration in the company's short-term liquidity position. Although the Current Ratio remains considerably higher than the industry median, which was 1.80 in 2023, the decrease is not favorable. Over the last 20 years, Hooker Furnishings' Current Ratio seems to have generally decreased from its peaks in the early 2000s when it was above 4. This trend might be an indicator of either increasing liabilities or decreasing current assets, which should be further examined. Overall, this criterion does not add a point in the Piotroski Analysis, yielding a score of 0.

Number of shares not diluted?

Change in shares outstanding is crucial as it indicates whether a company is issuing new shares to raise capital or buying back shares, which can impact shareholder value.

In 2023, the outstanding shares for Hooker Furnishings increased to 11,593,000 from 11,852,000 in 2022. This suggests a rise in the number of shares in circulation. Historically, the company's outstanding shares have fluctuated over the last two decades. For instance, shares went from 11,286,000 in 2003 gradually rising to a peak of 12,446,000 in 2008 before dropping to a low of 10,600,000 in 2009. Therefore, with the increase in 2023, we allocate a score of 0 according to the Piotroski F-Score criteria, which penalizes share dilution, suggesting the trend is unfavorable for this criteria.

Operating of Hooker Furnishings (HOFT)

Cross Margin is growing?

Gross margin measures a company's financial health and operational efficiency. An increasing gross margin indicates better cost management or pricing power.

For Hooker Furnishings (HOFT), the gross margin decreased from 0.1713 in 2022 to 0.16 in 2023. This indicates a decline in the company's cost management efficiency or pricing power. Over the past 20 years, Hooker Furnishings' gross margin has fluctuated, peaking at 0.307 in 2008 and reaching its lowest point in 2023. This downward trend contrasts with the industry median gross margin, which has generally remained higher and more stable. Given the recent decrease, no point is added for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency in using its assets to generate sales. It is a crucial indicator of operational efficiency.

The Asset Turnover for Hooker Furnishings (HOFT) has decreased from 1.6334 in 2022 to 1.542 in 2023, indicating a decline in operational efficiency. This negative trend suggests that the company has not managed its assets as effectively as in the previous year, thus earning 0 points in the Piotroski analysis. Historical data show fluctuating trends with notable peaks, such as 2.3073 in 2017, and depressions, indicating that the firm needs strategic initiatives to stabilize its efficiency in asset utilization.