Last update on 2024-06-07

Koninklijke KPN (KPN.AS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Analyze Koninklijke KPN (KPN.AS) using the Piotroski F-Score for 2023, examining financial health, profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 7

We're running Koninklijke KPN (KPN.AS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Koninklijke KPN scored 7 out of 9 on the Piotroski F-Score, which reflects its financial strength. Here are key points from the analysis: 1. **Profitability**: KPN had a positive net income and cash flow from operations, adding to their score. The return on assets (ROA) also improved, indicating better utilization of assets. Cash flow from operations exceeding net income showed good cash management. 2. **Liquidity**: Liquidity aspects were weaker with a slight increase in leverage and a decrease in the Current Ratio, missing points here. 3. **Efficiency**: Good performance in Gross Margin and Asset Turnover Ratio improved the score. Overall, the high score suggests KPN is a strong, financially healthy company.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7, Koninklijke KPN appears to be a strong and stable investment option. The company shows good profitability and operational efficiency, but there are concerns about its leverage and current ratio that potential investors should keep an eye on. It's worth looking into KPN further, especially considering its consistent cash flows and positive asset returns.

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

Profitability of Koninklijke KPN (KPN.AS)

Company has a positive net income?

The Net Income criterion measures company profitability. Positive net income indicates a profitable year, essential for sustained growth and shareholder returns.

For the year 2023, Koninklijke KPN (KPN.AS) posted a net income of 844,000,000, which is positive. This nets the company 1 point for this criterion according to the Piotroski F-Score methodology. Over the last 20 years, the net income trend has shown significant fluctuations. From highs like 3,870,716,000 in 2007 to lows such as -598,000,000 in 2013, the consistency of positive figures in recent years, including 2023, can be perceived as a positive trajectory since 2014. Therefore, this metric suggests financial health and stability in the recent term.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion assesses whether the company is generating sufficient cash flow from its core operational activities. It is important as it reflects the company's ability to sustain and grow its business.

In 2023, Koninklijke KPN (KPN.AS) reported a positive CFO of €2,242 million. This trend is favorable and reflects positively on the company's operational efficiency, contributing 1 point to the Piotroski score. Over the past 20 years, the company has consistently maintained a positive CFO, which underscores its robust cash-generating capabilities and operational stability. Although there has been some variability, the consistent positive cash flow positions KPN as a financially stable entity in its sector.

Return on Assets (ROA) are growing?

Changes in Return on Assets (ROA) help to measure a company's ability to generate profit from its assets. An increase suggests improving efficiency.

In 2023, the ROA for Koninklijke KPN (KPN.AS) was 0.0697, up from 0.0615 in 2022. This uptick indicates enhanced efficiency and profitability in asset utilization. Historically looking over 20 years, such positive movements, though relatively modest in this context given the long-term numbers, are valuable. Comparably, the industry median ROA in 2023 was significantly higher at 0.6122, highlighting potential areas for KPN to improve against peers. But this specific increase from 0.0615 to 0.0697 in 2023 is still good news, warranting an added point in the Piotroski score.

Operating Cashflow are higher than Netincome?

The criterion compares operating cash flow with net income, favoring companies where cash flow exceeds net income. This shows good cash management, leading to a firm's sustainability.

For Koninklijke KPN (KPN.AS) in 2023, the Operating Cash Flow is €2.242 billion, significantly higher than Net Income of € 844 million. This results in a positive score of 1 point, indicating sound financial health regarding cash generation relative to profit. Analyzing historical data, KPN consistently recorded higher operating cash flows compared to net income in the majority of the last 20 years, particularly notable during 2011-2014. Such a trend reinforces financial robustness and operational efficiency, vital factors in stability and growth.

Liquidity of Koninklijke KPN (KPN.AS)

Leverage is declining?

This criterion analyzes the change in the company's leverage ratio, usually defined as total debt divided by total assets. Lowering leverage signifies improved financial stability and reduced risk.

In 2022, Koninklijke KPN (KPN.AS) had a leverage ratio of 0.4966, which slightly increased to 0.5003 in 2023. This minor increase in leverage signals a deterioration in financial stability, albeit slightly. Over the past 20 years, KPN's leverage peaked in 2018 at 0.5737 and saw significant fluctuations. For 2023, since the leverage increased, no point is awarded (0 points). Continual monitoring is essential to ensure this upward trend does not persist, putting further financial strain on the company.

Current Ratio is growing?

The Current Ratio criterion measures a company's ability to pay short-term obligations with its short-term assets. It's important as it indicates liquidity.

Koninklijke KPN's Current Ratio decreased from 0.8276 in 2022 to 0.7545 in 2023. This decline is not favorable for the company's liquidity position. Notably, KPN's Current Ratio remains below the 2023 Industry Median of 0.9574, indicating potential challenges in meeting short-term liabilities compared to its peers. Over the past 20 years, KPN's Current Ratio has fluctuated, reaching as high as 1.7664 in 2017 and as low as 0.6226 in 2007.

Number of shares not diluted?

This criterion evaluates if the number of outstanding shares has decreased. A decrease could be beneficial to existing shareholders as it reduces dilution.

The outstanding shares for Koninklijke KPN (KPN.AS) in 2022 were 4,080,828,686, whereas, in 2023, the reported number is 0, which shows a point of data inconsistency because a company typically wouldn't have 0 outstanding shares if it's publicly traded. However, if we interpret the 2023 data as an indication of share increase, the absence of a decrease results in 0 points. This is not favorable for current shareholders as there’s no evidence of share buyback or issue reduction.

Operating of Koninklijke KPN (KPN.AS)

Cross Margin is growing?

Change in Gross Margin is the difference in the gross margin percentage over two periods. A higher gross margin is better as it indicates higher profitability.

In 2023, Koninklijke KPN's (KPN.AS) gross margin increased to 0.7845 from 0.7754 in 2022. This is a positive development as an increase in gross margin by 0.0091 points (or about 1.17%) signifies better cost management and higher profitability. Over the last 20 years, KPN's gross margins have shown an upward trend from 0.438 in 2003 to the current 0.7845, consistently outperforming the industry median gross margin of 0.6122 in 2023. Given this, KPN earns a score of 1 for this criterion.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures how efficiently a company is using its assets to generate sales. An increase implies better utilization.

The Asset Turnover for Koninklijke KPN (KPN.AS) has increased from 0.43 in 2022 to 0.4492 in 2023, marking a slight upward trend. This suggests an improvement in the company’s efficiency in using its assets to generate revenue, adding 1 point to the Piotroski score. Historically, the ratio saw higher values such as 0.5726 in 2003 but has since fluctuated. Overall, this increase in 2023 can be considered positive for asset management efficiency.