Last update on 2024-06-05

Invitation Homes (INVH) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Discover Invitation Homes' 2023 Piotroski F-Score of 6/9, reflecting financial strength and efficiency in profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 6

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

The Piotroski F-Score evaluates Invitation Homes (INVH) on profitability, liquidity, and operating efficiency, scoring 6 out of a possible 9 points. Key positive points include a significant increase in net income, positive cash flow from operations, an increasing Return on Assets (ROA), and higher operating cash flow than net income, reflecting good profitability and operational health. Liquidity is also strong, especially indicated by a much higher current ratio than the industry median. However, the rise in leverage, slight increase in outstanding shares, and a noticeable decline in gross margin are concerns. Nevertheless, the asset turnover ratio is improving, indicating better usage of company assets.

Insights for Value Investors Seeking Stable Income

INVH’s Piotroski F-Score of 6 is solid, indicating it’s financially sound but with some areas needing attention like leverage and gross margin. The overall strong fundamentals such as profitability, improving liquidity, and efficient asset usage make INVH generally an attractive option for potential investors. Those considering INVH should monitor its leverage and margin closely. It's worth looking into, especially if the company manages to address these issues in the future.

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

Profitability of Invitation Homes (INVH)

Company has a positive net income?

Determining net income is vital to understand a company's profitability by examining total revenue minus total expenses.

For Invitation Homes (INVH), the net income for 2023 is $519,470,000, which is positive, hence 1 point. Examining historical data from 2014 to 2023 reveals a substantial improvement in net income, turning from losses like -$269,861,000 in 2014 to significant profits. This growing trend suggests robust financial health and effective management, reflecting positively on investor confidence and company's valuation.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the cash generated by a company's regular operating activities. It is important because it shows the company's ability to generate positive cash flow from its core business operations.

The Cash Flow from Operations (CFO) for Invitation Homes (INVH) in 2023 is $1,107,088,000, which is positive. Over the past ten years, Invitation Homes has consistently increased its operating cash flow from $48,451,000 in 2014 to $1,107,088,000 in 2023. This steady growth suggests strong operational efficiency and a robust business model. Therefore, we assign 1 point to this criterion as the positive trend indicates healthy cash generation capabilities, fundamental for sustaining the business and funding expansions.

Return on Assets (ROA) are growing?

Change in ROA for Invitation Homes (INVH) and its importance.

The Return on Assets (ROA) increased from 0.0207 in 2022 to 0.0275 in 2023. This trend indicates a positive improvement in the company's efficiency in using its assets to generate earnings. To illustrate, from 2014 to 2023, their operating cash flow consistently escalated from $48.45 million to $1.107 billion, reflecting enhanced operational efficiency. However, compared to the industry median ROA, which hovered around 0.5648 to 0.5894 during the same period, INVH's ROA still remains significantly lower. There seems to be robust growth internally, but the sector's higher efficiency level denotes that there is more room for INVH to reach its industry counterparts.

Operating Cashflow are higher than Netincome?

Explain the criterion for Invitation Homes (INVH) and why it is important to consider

Operating cash flow is a measure of the cash generated by a company's regular business operations and is a key indicator of its short-term financial health. Net income, on the other hand, is the profit after all expenses have been deducted from revenue. Comparing these two metrics provides insights into the quality of earnings. If operating cash flow is higher than net income, it’s typically seen as a positive indicator, suggesting that the earnings are not heavily influenced by accounting adjustments or non-cash items.

Liquidity of Invitation Homes (INVH)

Leverage is declining?

Leverage measures a company’s ability to meet its financial obligations, reflecting debt levels.

Invitation Homes (INVH) has seen an increase in leverage from 0.4191 in 2022 to 0.4446 in 2023, representing a higher financial risk. Adding this trend to the broader context of the past decade, the leverage experienced a general downward trajectory from its peak at 0.7886 in 2015 to a low of 0.4191 in 2022, making the recent uptick noteworthy.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. Comparing the latest year against the prior year helps determine if liquidity is improving.

Invitation Homes (INVH) has seen its Current Ratio rise from 3.4146 in 2022 to 5.7053 in 2023. This represents a considerable increase, showcasing a much healthier liquidity position. Historically, INVH's figures have fluctuated, reaching lows in 2014 of 0.1734, which means this upward trend is especially significant. Compared to the industry median, which remained below 1, INVH's current ratio is significantly higher, suggesting that the company is much better positioned than its peers to cover short-term liabilities. This trend is favorable and adds one point in the Piotroski Analysis.

Number of shares not diluted?

Change in shares outstanding is critical as it affects ownership, earning shares, and market perception about capital strategies.

In 2022, outstanding shares were 609,770,610, increasing to 611,893,784 in 2023. This 0.35% rise signals a potential shareholder dilution, affecting ownership stakes and per-share metrics. For growth-oriented firms, this is bad as dilution might reduce per-share earnings, offsetting gains from capital raises for expansion. Historical data from 2014-2023 consistently show increases, indicating a trend of financing via equity rather than debt. Capital infusion remains beneficial if efficiently deployed to enhance revenue/profitability, which shareholders must monitor keenly.

Operating of Invitation Homes (INVH)

Cross Margin is growing?

Evaluates if the company's Gross Margin has increased compared to the previous year. This indicator is crucial as it reflects the efficiency of a company in controlling production costs, providing insights into profitability.

When comparing the Gross Margin for Invitation Homes from 2022 (0.6094) to 2023 (0.5987), there is a decline. Hence, the Gross Margin has decreased by 0.0107 points in 2023. This reduction is significant since maintaining or improving gross margins are crucial for long-term profitability. Considering that the industry median Gross Margin also dropped from 0.5922 in 2022 to 0.5894 in 2023, Invitation Homes' decline seems part of a broader industry trend albeit worse. Thus, no point is awarded for this criterion, yielding a score of 0.

Asset Turnover Ratio is growing?

This criterion examines the efficiency with which a company utilizes its assets to generate revenue, with a higher turnover indicating better performance.

In 2023, Invitation Homes (INVH) registered an Asset Turnover of 0.1288, an increase from the Asset Turnover of 0.1207 in 2022. This improvement suggests that the company has become more efficient in using its assets to generate revenue, assigning it 1 point for this criterion. Notably, the trend witnessed over the last decade shows consistent growth, starting from 0.088 in 2015 to the current 0.1288 in 2023, except for a slight dip in 2017. Such a persistent increase hitherto underscores a progressively efficient asset utilization strategy, signaling robust internal operational improvements.