Last update on 2024-06-04

Infineon Technologies (IFX.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Explore the detailed Piotroski F-Score analysis for Infineon Technologies (IFX.DE) in 2023, achieving an impressive score of 8 out of 9.

Short Analysis - Piotroski Score: 8

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

The Piotroski F-Score helps understand a company's financial health. For Infineon Technologies (IFX.DE), the Piotroski Score is 8 out of 9, indicating a strong financial position. Here are the highlights: 1. **Profitability & Efficiency: ** - Positive net income: €3,137,000,000 in 2023, a steady increase from historical losses. - Positive operating cash flow: €3.96 billion, showing solid financial health. - Increasing Return on Assets (ROA): From 0.0867 in 2022 to 0.1133 in 2023, although still below the industry median. - Operating cash flow exceeds net income, affirming earnings quality. 2. **Liquidity & Leverage:** - Decreasing leverage ratio: From 0.194 in 2022 to 0.1657 in 2023, implying lower financial risk. - Improving current ratio: From 1.6917 in 2022 to 1.886 in 2023, signifying better short-term financial strength. - Increasing shares outstanding: Increased from 1,301,800,000 in 2022 to 1,303,000,000 in 2023, potentially diluting shareholder value. 3. **Operating Efficiency:** - Increasing gross margin: From 0.4312 in 2022 to 0.4545 in 2023, highlighting better cost management. - Better asset turnover: From 0.5659 in 2022 to 0.5893 in 2023, showing enhanced asset efficiency.

Insights for Value Investors Seeking Stable Income

With a Piotroski Score of 8 out of 9, Infineon Technologies (IFX.DE) exhibits strong financial health and operational efficiency. The positive trend in net income, cash flow, ROA, leverage, current ratio, gross margin, and asset turnover indicate robust performance. However, potential dilution owing to an increase in shares may impact current shareholders. Given the overall positive outlook, Infineon Technologies is worth considering for investors seeking strong, undervalued stocks with significant growth potential in the semiconductor sector.

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

Profitability of Infineon Technologies (IFX.DE)

Company has a positive net income?

Net income is a company's total earnings, reflecting its profitability after all expenses, taxes, and costs have been subtracted from total revenue.

Infineon Technologies has reported a net income of €3,137,000,000 in 2023, which is indeed positive. Historically, the company has shown a significant improvement in its profitability over the last two decades. For instance, back in 2003, their net income was at a loss of around €434.93 million. Over the years, there were fluctuations with notable losses in several years such as 2005 and 2008, but from 2010 onwards, Infineon largely maintained positive net income. The upward trend peaking at €3.137 billion in 2023 reflects effective management and strategic growth moves. Therefore, the company earns 1 point for positive net income in the Piotroski analysis. This trend is very favorable as continual profitability typically boosts investor confidence and affirms the firm's strong operational foundation.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a critical measure of a company's liquidity and financial health, depicting its ability to generate cash from core operations.

For Infineon Technologies (IFX.DE), the CFO in 2023 is €3,960 million, which is positive. This metric highlights the company's robust ability to generate cash from its operations. Analyzing the trend over the last 20 years, Infineon has consistently turned around from negative CFO figures in 2008 and 2009 to demonstrating strong positive results in recent years. The highest CFO was recorded in 2022 at €3,980 million, showcasing a solid upward trajectory. This positive trend is favorable as it indicates operational efficiency and a solid cash generation capacity, awarding it 1 point in the Piotroski Analysis.

Return on Assets (ROA) are growing?

The criterion for evaluating change in Return on Assets (ROA) involves comparing the ROA of the current year with that of the previous year. This metric is crucial as it provides insights into the company’s efficiency in generating profits from its assets, revealing improvements or declines in operational performance.

In 2023, Infineon Technologies reported an ROA of 0.1133, up from 0.0867 in 2022. This increase indicates a positive trend, suggesting improved efficiency in utilizing assets to generate profits. Comparing these figures against the broader 20-year industry median ROA, we observe that while Infineon's ROA has improved, it still lags behind the median ROA of the industry, which was 0.4919 in 2023. This signifies that although Infineon Technologies is making progress, there is considerable room for further improvement when judged against its industry peers. Overall, this increase adds 1 point according to the Piotroski analysis criteria, illustrating a favorable upward trend in operational efficiency. Additionally, analyzing the operating cash flow over the years, which reached 3,960,000,000 in 2023 from 3,980,000,000 in 2022, supports the notion of robust operational performance.

Operating Cashflow are higher than Netincome?

Operating Cash Flow should be greater than Net Income to add quality to earnings.

For Infineon Technologies, the operating cash flow in 2023 was €3.96 billion, while the net income was €3.137 billion. As the operating cash flow is higher, this suggests that the company's operations are generating sufficient cash compared to the reported net income, supporting the quality of earnings. Over the past two decades, the operating cash flow has shown a general upwards trend, moving from as low as €730.03 million in 2003 to approximately €3.96 billion in 2023. Simultaneously, the net income has also improved significantly from negative earnings in the earlier years (i.e., -€434.93 million in 2003) to the substantial positive net income seen today. Based on the Piotroski criterion, Infineon Technologies earns 1 point. This trend signals strong operational health and efficient cash management relative to reported profits.

Liquidity of Infineon Technologies (IFX.DE)

Leverage is declining?

Change in leverage evaluates how a company’s use of debt has altered from one year to the next. Lower leverage indicates reduced financial risk.

For Infineon Technologies (IFX.DE), the leverage ratio decreased from 0.194 in 2022 to 0.1657 in 2023, marking a reduction in the company's financial risk. Leverage has been volatile over the past 20 years, but the recent decrease signifies improved financial stability and results in an allocation of 1 point for this criterion. Over the last 20 years, high points of leverage were recorded in 2020 at 0.3074, showcasing a significant reduction since then.

Current Ratio is growing?

The Current Ratio is a crucial liquidity metric that measures a company's ability to cover its short-term obligations with its short-term assets. A ratio above 1 indicates good solvency.

In 2023, Infineon Technologies' Current Ratio increased to 1.886 from 1.6917 in 2022, ranking an additional point in Piotroski analysis. This trend shows improved liquidity, enabling the company to better manage its liabilities. Compared to the last 20-year trends, both Infineon's and the industry median's Current Ratio fluctuates. However, Infineon's figures are often lower than industry median, though steady growth is shown from the significant drop since 2019.

Number of shares not diluted?

Change in Shares Outstanding refers to the variation in the number of shares that a company has issued to investors. An increase in outstanding shares typically dilutes the value of existing shares and may indicate equity financing activities, while a decrease is advantageous for shareholders as it can signify share repurchase programs or lesser dilution.

Infineon Technologies saw its outstanding shares increase from 1,301,800,000 in 2022 to 1,303,000,000 in 2023. This increase suggests that there was further issuance of shares or conversion of convertible securities. Over the last 20 years, Infineon's shares outstanding have generally shown an upward trend, with notable increases in 2010 and 2020, which may have accompanied major financing or acquisition activities. The trend of increasing shares continues, resulting in a score of 0 for this criterion.

Operating of Infineon Technologies (IFX.DE)

Cross Margin is growing?

The criterion examines variations in gross margin, a critical profitability metric reflecting a company's ability to manage production costs versus sales. An increase signals improved profitability and operational efficiency.

For Infineon Technologies, the gross margin increased from 0.4312 in 2022 to 0.4545 in 2023. This improvement represents a positive trend, indicating better operational efficiency and profitability management. This earns Infineon Technologies 1 point under this criterion. When contrasted with the industry median gross margin, which increased from 0.4303 to 0.4919 during the same period, Infineon's gross margin shows solid progress, though still trailing behind the industry average. Yet, the upward trend since 2021 suggests solid management of production costs and pricing strategies, critical for sustaining competitive advantage in the semiconductor sector.

Asset Turnover Ratio is growing?

Change in Asset Turnover examines how efficiently a company is using its assets to generate sales. It's key for assessing operational efficiency.

In 2023, Infineon Technologies (IFX.DE) saw its Asset Turnover increase to 0.5893 from 0.5659 in 2022, marking an enhancement in operational efficiency. Considering a 0.0415 raise over the past year, it's a positive trend, demonstrating the company's better utilization of its asset base. In fact, this uptick against a backdrop of several historical asset turnovers—though reaching peaks above 0.7 pre-2010—reflects resilience in improving efficacy in more recent years. Consequently, Infineon earns 1 point for this criterion.