Last update on 2024-06-07

Littelfuse (LFUS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze Littelfuse (LFUS) using the Piotroski F-Score system for 2023. Detailed insights on profitability, liquidity, and operating efficiency. Final Score: 5/9.

Short Analysis - Piotroski Score: 5

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

The Piotroski F-Score is a 9-point rating system that evaluates a company's financial health based on its profitability, liquidity, and operating efficiency. In this analysis, Littelfuse (LFUS) was evaluated: it achieved a total score of 5 out of 9. The company showed good profitability with positive net income and cash flow from operations surpassing net income. However, there were negative signs, such as a declining return on assets, increasing leverage, slight share dilution, decreased gross margin, and lower asset turnover ratio. Despite these, LFUS displayed a strong current ratio, indicating good liquidity.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, Littelfuse (LFUS) shows a mixed performance with both strengths and weaknesses. As an investor, it's crucial to note both the positive trends in profitability and liquidity, and the concerning factors like rising leverage and decreased efficiency. If you're considering investing, further research is recommended to understand the potential risks and long-term prospects of LFUS. It has some strengths, but also areas that could impact future performance.

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

Profitability of Littelfuse (LFUS)

Company has a positive net income?

Net income is an essential criterion as it reflects the profitability of a company, providing insights into its financial health and capability to generate earnings.

The net income of Littelfuse (LFUS) in 2023 stands at $259,485,000, which is positive. Based on the Piotroski F-Score methodology, this would add 1 point to the score. Over the past 20 years, Littelfuse has demonstrated a consistent ability to generate positive net income, despite fluctuations aligned with market conditions. For instance, while their net income increased significantly in 2021 to $373,306,000, it decreased in the subsequent years. However, it remains healthy, indicating robust financial health. Thus, for the criterion of net income, Littelfuse secures a point, reflecting a favorable position in distinguishing its financial robustness and profit-generating ability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) evaluates the liquidity generated by a company's core business activities, pertinent for assessing operational efficiency.

Littelfuse (LFUS) reported a positive Cash Flow from Operations (CFO) amounting to $457,387,000 in 2023. This marks a continuous positive trend over the last 20 years, showcasing a consistent growth in operational cash flow from $49,953,000 in 2003. This upward trend highlights Littelfuse's robust operational efficiency and the reliable generation of cash from its core business activities. The positive CFO results in adding 1 point for this criterion, affirming the company's strong cash-generating capability, which is crucial for funding ongoing operations, investments, and debt repayments.

Return on Assets (ROA) are growing?

The criterion examines the change in Return on Assets (ROA) with a focus on periods where there is an increase in ROA. An improving ROA generally signals that the company is becoming more efficient in generating profit from its assets.

Littelfuse's (LFUS) ROA decreased from 0.1058 in 2022 to 0.0657 in 2023, reflecting a negative trend. This decline indicates reduced efficiency in generating profit from the company's assets. A decreasing ROA can suggest several underlying issues such as higher costs or lower asset utilization, potentially dragged down by macroeconomic factors or company-specific challenges. Comparing this to the industry median ROA, which was 0.2104 in 2023, Littelfuse notably underperformed its peers. Hence, for this performance measure, Littelfuse would score 0 points as its ROA did not improve in 2023.

Operating Cashflow are higher than Netincome?

One of the criterion in Piotroski analysis is comparing the operating cash flow to net income.

For the fiscal year 2023, Littelfuse (LFUS) registered an operating cash flow of $457.39 million and a net income of $259.49 million. Since the operating cash flow surpasses the net income, this satisfies the criterion, resulting in a score of 1 point. This indicates that Littelfuse is generating ample cash from its operations relative to its accounting profit, hence it’s a positive sign. Historically, the operating cash flow has shown consistent growth, increasing from $49.95 million in 2003 to $457.39 million in 2023. During the same period, net income also witnessed a growth trend from $15.34 million in 2003 to $259.49 million in 2023. Despite year-on-year fluctuations, the upward trajectory of both these metrics signifies strong financial health and efficient operations, reinforcing the positive interpretation of this criterion.

Liquidity of Littelfuse (LFUS)

Leverage is declining?

This criterion evaluates whether a company has reduced its financial leverage, or leverage ratio, over the past year. A reduced leverage ratio can indicate a reduction in financial risk.

Comparing the leverage ratios, we observe an increase in leverage from 0.2271 in 2023, up from 0.2337 in 2022. This indicates that Littelfuse has not succeeded in reducing its leverage over the review period. The historical data reveals fluctuating leverage levels over the past two decades, with a noticeable increase from the extremely low levels seen in the early 2000s. The current upward trend might suggest increased debt levels, which can elevate financial risk and may impact the company's financial stability. Hence, this criterion scores 0.

Current Ratio is growing?

Current Ratio is a liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets.

The current ratio of Littelfuse (LFUS) has increased from 2.6416 in 2022 to 3.7513 in 2023. This augmentation is positive as it indicates a stronger liquidity position. Specifically, the company's 2023 current ratio significantly surpasses the industry median of 2.0742, suggesting superior financial health compared to its peers. Historically, LFUS's current ratio has fluctuated, peaking at 4.4529 in 2019 and troughing at 1.7885 in 2003. Given this increase, one point is added in the Piotroski analysis.

Number of shares not diluted?

Comparing the yearly outstanding shares of Littelfuse is crucial to understand share dilution and its impact on shareholder value.

The Outstanding Shares of Littelfuse increased from 24,734,000 in 2022 to 24,854,000 in 2023. This increase implies a dilution in shareholder value, negatively affecting the Piotroski Score. Over the past 20 years, the numbers demonstrate a general upward trend in outstanding shares, with occasional reductions. Notably, 2023 mirrors the highest point in the dataset. Frequent increases may indicate recurring capital raises, which can be a red flag. Consequently, for 2023, this criterion yields 0 points, showing a less favorable condition.

Operating of Littelfuse (LFUS)

Cross Margin is growing?

Gross Margin evaluates the efficiency of a company's core activities by comparing gross profit to net sales. An increasing gross margin suggests better control over production costs or improved sales pricing.

The Gross Margin of Littelfuse (LFUS) has decreased from 0.4005 in 2022 to 0.381 in 2023. This represents a drop of approximately 4.8%, which is seen as negative in terms of profitability. Furthermore, this decrease places the company's 2023 gross margin significantly above the industry median of 0.2104, indicating that while the company's margin has decreased, it still demonstrates superior efficiency in its core activities compared to median industry performance. However, compared to Littelfuse's historical data, this is a step back, marking only the second decline in the past thirteen years with 0 points assigned for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover is an efficiency ratio that measures a company's ability to generate sales from its assets.

The Asset Turnover for Littelfuse (LFUS) decreased from 0.7126 in 2022 to 0.5982 in 2023. This decline in the Asset Turnover ratio is concerning because it indicates that Littelfuse was less efficient in using its assets to generate revenue in 2023 compared to the previous year. Historically, we can observe that the company had higher Asset Turnover ratios, with values such as 1.1524 in 2003 and 1.3577 in 2004. Over the last two decades, there's a visible downward trend observed in asset utilization efficiency. This decreasing trend needs addressing to ensure that the company's assets are optimally leveraged to drive sales. Therefore, for the Piotroski F-score, this criterion gets 0 points.