Last update on 2024-06-07

Heartland Express (HTLD) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Heartland Express (HTLD) achieves a Piotroski F-Score of 5/9 in 2023. Explore insights into its financial health, profitability, and liquidity.

Short Analysis - Piotroski Score: 5

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

Heartland Express (HTLD) scored a 5 out of 9 on the Piotroski F-Score, which analyzes the company's financial health based on profitability, liquidity, and operating efficiency. The company has a positive net income and cash flow from operations, indicating profitability. It has also managed to reduce its leverage, meaning it has less debt. However, there are concerns: the return on assets has decreased significantly, gross margin has dropped, and the current ratio is below industry standards. Additionally, there has been a slight dilution in shares and a notable decline in net income from the previous year.

Insights for Value Investors Seeking Stable Income

Heartland Express shows some strengths, like consistent positive cash flow and reduced leverage, which may appeal to investors. However, significant issues, such as decreasing profitability and efficiency, declining gross margin, and shareholder dilution, are concerning. If you're an investor considering this stock, it may be worth investigating further to understand the reasons behind these negative trends before making a decision.

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

Profitability of Heartland Express (HTLD)

Company has a positive net income?

The criterion checks for positive net income in the latest fiscal year, indicating profitability.

Heartland Express (HTLD) recorded a net income of $14,775,000 in 2023. This number is indeed positive, which is encouraging from a profitability standpoint. Adding 1 point based on the Piotroski scoring system. However, examining the historical data reveals a concerning trend: net income has significantly decreased from its peak of $133,584,000 in 2022. Over the last 20 years, 2023's net income is at its lowest, suggesting potential challenges the company may be facing. This decline warrants further investigation into possible reasons behind such a drastic drop.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the amount of cash generated by a company's normal business operations. It indicates whether a company can generate sufficient positive cash flow to maintain and grow its operations.

Heartland Express (HTLD) has recorded a Cash Flow from Operations (CFO) of $165.27 million for the year 2023, which is positive. Thus, according to the Piotroski F-Score, HTLD earns 1 point for this criterion. Historically, HTLD has consistently maintained a positive CFO over the last 20 years, showcasing its strong operational capabilities. The annual CFO values over the past two decades include $97.08 million in 2003, $103.52 million in 2004, up to $194.71 million in 2022. This compounding positive cash flow trend solidifies investor confidence in the company’s operational efficiency and financial sustainability. Therefore, the consistently positive trend is favorable and good for the given criteria.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures how efficiently a company is using its assets to generate earnings. It's important as it provides insight into management effectiveness.

In 2023, Heartland Express (HTLD) reported an ROA of 0.0094, a stark decrease from its ROA of 0.1041 in 2022. This alarming drop signifies deteriorating asset performance, likely influenced by declining operating cash flows, which stood at $165,267,000 in 2023 compared to $194,713,000 in 2022. Moreover, HTLD’s ROA is significantly lower than the industry median ROA, which was 0.1488 in 2023, compared to previous years when both metrics were closer. This trend is concerning as it highlights inefficiencies in the company's use of its assets relative to industry benchmarks.

Operating Cashflow are higher than Netincome?

Determining whether the Operating Cash Flow (OCF) is higher than Net Income (NI) is crucial because it indicates the company's ability to generate cash from its operating activities, which is essential for growth, paying dividends, and debt management. A consistently higher OCF compared to NI showcases a firm’s operational efficiency and reliability.

For Heartland Express (HTLD), the Operating Cash Flow (OCF) in 2023 is $165,267,000 while the Net Income (NI) is $14,775,000. This clearly shows the OCF is significantly higher than the NI. Historically, analyzing the last 20 years, we observe that Heartland Express (HTLD) has consistently reported operating cash flows ranging from $97,084,309 in 2003 to a peak in 2020 with $194,713,000. This consistency is commendable and asserts Heartland Express's ability to efficiently convert its earnings into actual cash. Consequently, in this criterion, HTLD earns 1 point, highlighting a positive operational efficiency and consistent cash generation ability which is favorable to investors seeking reliability in cash returns.

Liquidity of Heartland Express (HTLD)

Leverage is declining?

Change in leverage scrutinizes the variation in a company's level of debt, assessing its willingness and capacity to meet financial obligations.

In 2022, Heartland Express exhibited a leverage ratio of 0.2491, which slightly decreased to 0.198 in 2023. This decline illustrates a reduction in the company's reliance on debt for its capital structure, improving its financial stability. Notably, Heartland Express has maintained very low to non-existent leverage over the past two decades, except for 2013 and 2014 when it had minimal leverage, and a significant spike in 2022. The current decrease in leverage back to lower levels signals a positive trend, awarding the company 1 point for reduced financial risk.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It's important as it provides insight into the company's short-term financial health.

The Current Ratio of Heartland Express (HTLD) decreased from 1.4658 in 2022 to 1.3709 in 2023. This is a decline, indicating that the company's ability to cover its short-term liabilities with its short-term assets has weakened. The historical data shows a significant drop from ratios as high as 4.6741 (2011) to the current low. When compared with the industry median for 2023, which stands at 1.3866, HTLD's Current Ratio is slightly below the standard. Hence, for Piotroski Analysis, this results in adding 0 points for the Current Ratio criterion.

Number of shares not diluted?

Change in shares outstanding indicates if a company is diluting the value for current shareholders.

Comparing the outstanding shares of Heartland Express (HTLD) between 2022 and 2023, we see that the shares increased slightly from 78,941,000 in 2022 to 79,010,000 in 2023. This 0.09% increase means current shareholders experienced a minor dilution in their ownership. Reviewing the 20-year data, it's notable that while shares have trended downwards significantly from over 99 million in 2003, the recent increase breaks that trend. Therefore, for the Piotroski Analysis, this criterion gets a score of 0.

Operating of Heartland Express (HTLD)

Cross Margin is growing?

One crucial component of the Piotroski F-Score assessment is the change in gross margin. This criterion evaluates the company's ability to improve its production efficiency and control its costs.

The Gross Margin for Heartland Express (HTLD) was 0.1904 in 2022 and decreased to 0.1023 in 2023, indicating a significant decline. This translates to poor performance, scoring 0 points in this criterion. For perspective, considering the past 20 years, Heartland's Gross Margin fluctuated significantly, with a notable peak at 0.7888 in 2009. However, the 2023 Gross Margin of 0.1023 is also below the industry median of 0.1488 for the same year. This underperformance signifies that HTLD is currently less efficient in converting revenue into profit compared to both its historical performance and its industry peers.

Asset Turnover Ratio is growing?

Asset Turnover ratio measures a company's efficiency in using its assets to generate sales. An increasing ratio indicates better performance.

The Asset Turnover ratio for Heartland Express has seen a slight increase from 0.7544 in 2022 to 0.7673 in 2023. This marginal uptick reflects a positive trend, suggesting Heartland Express has become slightly more efficient in utilizing its assets to generate revenue. Analyzing the long-term trend over the past 20 years: the company's highest ratio was 1.1737 in 2013, and the lowest was 0.6461 in 2021. The overall downward trend followed by the recent increase may indicate a potential recovery in operational efficiency. With this year-over-year increase, Heartland Express earns 1 point in Piotroski analysis.