Last update on 2024-06-06

Hologic (HOLX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Hologic's (HOLX) Piotroski F-Score for 2023 is 5/9. Discover the financial health and investment quality of the company based on profitability, liquidity, and efficiency.

Short Analysis - Piotroski Score: 5

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

The Piotroski F-Score is a measure used to assess the financial health of a company. It's based on 9 criteria involving profitability, liquidity, and operating efficiency, and helps identify strong, undervalued investments. For Hologic (HOLX), running against the Piotroski scoring system reveals a score of 5 out of 9. Profitability: Hologic has a positive net income (+$456M in 2023) and positive cash flow from operations (+$1.05B in 2023), earning points here. However, its ROA decreased significantly, earning 0 points. Liquidity: Although leverage has increased (0.3175 to 0.2838), its current ratio, though decreased from 4.1186 to 3.466, is still high compared to the industry. Shares outstanding decreased, reflecting positively. Efficiency: Gross margin and asset turnover ratio both declined from previous years, earning 0 points. Overall, Hologic demonstrates strengths in cash flow, net income, and shares management but faces weaknesses in asset utilization, ROA, and gross margin.

Insights for Value Investors Seeking Stable Income

Based on this analysis, Hologic (HOLX) shows mixed results with a Piotroski F-Score of 5 out of 9. The company demonstrates solid profitability and good liquidity, but its declining ROA, gross margin, and asset turnover ratio are concerning. For an investor, it may be worth looking into but with a cautious approach due to the areas of weaknesses identified.

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

Profitability of Hologic (HOLX)

Company has a positive net income?

Positive net income indicates that the company is profitable, which is essential for long-term sustainability.

For the year 2023, Hologic (HOLX) reported a net income of $456 million, which is positive. Over the past 20 years, the company has experienced fluctuations in its net income, including some significant losses. However, in recent years, particularly from 2018 onwards, Hologic has mostly posted positive net income, indicating an improvement in profitability and financial stability. Therefore, based on the positive net income for 2023, Hologic earns 1 point for this criterion. This trend is favorable for the company's financial health and investor confidence.

Company has a positive cash flow?

The criterion assesses if the company's Cash Flow from Operations (CFO) is positive. Positive CFO indicates good liquidity and efficient operations.

Hologic (HOLX) has a positive Cash Flow from Operations for 2023, amounting to $1,051,200,000. This is a positive signal, indicating robust liquidity and efficient management of operating activities, adding 1 point. Over the past two decades, HOLX has shown a general upward trend in its CFO, peaking at $2,330,400,000 in 2021. Although there were occasional dips, the overall pattern suggests strong operational performance. Therefore, investors can be confident in the company's ability to generate cash from its core business, validating its financial health and operational efficiency.

Return on Assets (ROA) are growing?

Return on assets (ROA) is a financial ratio that illustrates how profitable a company's assets are in generating revenue.

Hologic's ROA in 2023 is 0.0501, which is a steep decline compared to the 0.1447 recorded in 2022. Such a decrease implies that the company has become significantly less efficient in generating earnings from its assets. Over the past 20 years, Hologic has seen fluctuating trends in ROA, but the 2023 figure is alarmingly lower than not only its historical highs but also the industry median ROA, which sits around 0.5549 in 2023. This trend is concerning and warrants deep investigation into the underlying causes—indicating 0 points for this Piotroski criterion.

Operating Cashflow are higher than Netincome?

The criterion states that operating cash flow should be higher than net income, an indicator that earnings quality is strong and profits are more likely coming from actual business operations rather than accounting adjustments.

For the fiscal year 2023, Hologic’s operating cash flow stands at $1,051,200,000 while net income amounts to $456,000,000. This difference indicates higher earnings quality and suggests a score of 1 point for this criterion. Over the last 20 years, the company has seen significant variability, with occasional negative net income. The current figures are a positive sign, reflecting robust operational performance despite historical fluctuations.

Liquidity of Hologic (HOLX)

Leverage is declining?

Change in Leverage criterion is a measure of a company's financial risk by comparing long-term debt to equity. Lower leverage indicates a reduction in financial risk, which can be a sign of financial health.

The leverage for Hologic (HOLX) increased from 0.3175 in 2022 to 0.2838 in 2023. According to this data, Hologic fails to score a point on this criterion as the leverage has not decreased. This trend is generally viewed as unfavorable since an increase in leverage implies higher financial risk. With a historical context, it can be seen that Hologic's leverage has been relatively volatile over the past 20 years. Peaks like 0.4936 in 2014 and troughs such as 0 seen in 2005 indicate an oscillating level of risk exposure. Despite this recent uptick, Hologic's leverage remains in a lower risk bracket than its historical peak, suggesting room for strategic debt management.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay its short-term obligations with its short-term assets. A higher ratio indicates better liquidity position.

The Current Ratio for Hologic (HOLX) has decreased from 4.1186 in 2022 to 3.466 in 2023. This represents a decline in liquidity as the company's ability to meet short-term obligations has reduced. The declining trend observed from 2022 is worth noting; however, when viewed over a 20-year horizon, the Current Ratio for 2023 is relatively high. In comparison to the industry median of 2.3418 in 2023, Hologic's Current Ratio appears strong. Therefore, while there is a negative year-over-year change, the company's liquidity position is above average when compared to industry standards.

Number of shares not diluted?

Stock shares represent ownership in a company. A decrease in outstanding shares is generally positive as it indicates share buybacks, potentially signaling the company's strong financial health or management's positive outlook on future growth.

The outstanding shares for Hologic (HOLX) decreased from 251,527,000 in 2022 to 246,772,000 in 2023, resulting in a decrease of 4,755,000 shares. Historically, Hologic’s outstanding shares have fluctuated significantly, peaking at over 278 million in 2014 and gradually decreasing since then. This recent decline in shares outstanding is a positive sign and warrants a score of 1 point according to the Piotroski analysis criteria.

Operating of Hologic (HOLX)

Cross Margin is growing?

Change in Gross Margin compares the company's gross profit as a percentage of revenue year over year.

In 2022, Hologic's gross margin was 0.6164, whereas in 2023 it declined to 0.514. This signifies a notable decrease in gross margin by over 16%, indicating increased cost of goods sold or less efficient operations in the most recent fiscal year. Typically, a higher gross margin denotes better profitability and operational efficiency. Based on the last 20 years of data, Hologic has seen fluctuations in its gross margins, but the current 2023 figure is one of the lower points, excluding the dip in 2019 at 0.3885. Moreover, compared to the industry's median gross margin in 2023, which stands at 0.5549, Hologic's gross margin is underwhelming. Therefore, for the Piotroski Score, Hologic will not earn a point for this criterion.

Asset Turnover Ratio is growing?

The criterion evaluates whether the company made better use of its assets to generate revenue. Increasing asset turnover indicates improved efficiency with asset utilization.

Comparing the Asset Turnover of Hologic in 2023 (0.4426) with 2022 (0.5406), it has decreased. Therefore, we set the point to 0. This downturn signifies that Hologic used its assets less efficiently in 2023 compared to the previous year. Diving deeper into the 20-year trend, we observe fluctuations with significant highs in earlier years (1.1704 in 2005) and a notable low in 2009 (0.2368). The asset turnover ratio has not stabilized in recent years, peaking in 2021 (0.699) before trending downward again. Therefore, the drop in 2023 is concerning as it breaks the previously improving trend.