Last update on 2024-06-07

Logitech (LOGI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

In-depth 2023 Piotroski F-Score analysis for Logitech (LOGI). Current score: 5/9. Insightful financial performance evaluation using 9 key metrics.

Short Analysis - Piotroski Score: 5

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

Logitech (LOGI) has been analyzed using the Piotroski F-Score method, which assesses a company's financial strength in profitability, liquidity, and operating efficiency. Logitech scored 5 out of 9. The company shows positive trends in net income and cash flow, performing well in profitability criteria. It also exhibits good liquidity with an increasing current ratio and share buybacks. However, there are concerns, like the decline in asset utilization efficiency, an increase in leverage, and a decrease in gross margin and Return on Assets (ROA). These mixed results suggest moderate financial health, meeting some but not all of the Piotroski criteria.

Insights for Value Investors Seeking Stable Income

Investing in Logitech (LOGI) could be a moderate-risk opportunity. The company displays strong operational and liquidity signs and has been effective in managing its shares. However, investors should be cautious due to declining ROA, gross margin, and asset turnover. It might be worth a closer look if you believe the company can improve its operational efficiency. Diversifying investments and not relying solely on Logitech would be advisable.

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

Profitability of Logitech (LOGI)

Company has a positive net income?

Net Income is a crucial indicator of profitability. A positive net income often signifies a profitable company, which tends to reflect operational efficiency and strong revenue management.

The net income for Logitech (LOGI) in 2023 is $364,575,000, indicating a positive trend. This earns the company 1 point for this criterion. Over the last 20 years, the net income has fluctuated but generally shows an upward trend, especially significant improvements post-2016. The peak was in 2021, with a net income of $947,257,000. Thus, this positive net income is a favorable indicator of Logitech's profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is crucial for understanding a company's financial health. Positive CFO indicates that the company is generating enough cash to sustain its operating activities.

For Logitech (LOGI), the Cash Flow from Operations in 2023 is $534,010,000, which is positive. This is a favorable trend and adds 1 point in the Piotroski Analysis. Over the last 20 years, the CFO has generally shown an upward trend, particularly spiking in recent years with $1,458,638,000 in 2021, showcasing exceptional operational efficiency.

Return on Assets (ROA) are growing?

The ROA, or Return on Assets, is a measure of how effectively a company utilizes its assets to generate profits. By comparing the net income to total assets, ROA provides insights into operational efficiency and profitability. An improving ROA indicates better asset productivity.

Logitech's ROA decreased from 0.1576 in 2022 to 0.096 in 2023, indicating less effective asset utilization. Historically, the company has seen fluctuations, but this recent decline falls below the industry median ROA, which stood at 0.3501 in 2023. This is a concerning trend, reflecting reduced profitability and operational efficiency compared to the industry. Therefore, no point is awarded in the Piotroski Analysis for this criterion.

Operating Cashflow are higher than Netincome?

Operating Cash Flow being higher than Net Income serves as an indicator of earnings quality and financial health. It suggests the company generates strong cash flows, supporting business sustainability and reducing the risk of earnings manipulation.

For the year 2023, Logitech reported an Operating Cash Flow of $534.01 million and a Net Income of $364.575 million. Since the Operating Cash Flow is indeed higher than the Net Income, it fulfills the criterion, scoring 1 point. Historically analyzing the data over the past 20 years, it is observed that Operating Cash Flow has generally trended positively except for a few dips in 2013 and 2014. This trend is a healthy indicator of Logitech's consistent ability to convert its profits into actual cash, underlining the robustness in its financial operations.

Liquidity of Logitech (LOGI)

Leverage is declining?

Change in Leverage measures the variation in financial leverage, a key indicator of financial risk. Lower leverage indicates reduced risk and better management of debt obligations.

In 2022, Logitech's leverage was 0.007, but it increased to 0.0164 in 2023. This rise in leverage could signal higher financial risk and reliance on debt. Given the historical fluctuation, notably a zero leverage from 2006 to 2012, this increase indicates a deviation from its low-leverage strategy in the past decade. As leverage has increased, it fails this Piotroski criterion, earning 0 points.

Current Ratio is growing?

The Current Ratio measures a company’s ability to meet short-term liabilities with short-term assets. A higher ratio suggests better liquidity.

Logitech’s Current Ratio increased from 2.1623 in 2022 to 2.4809 in 2023, indicating improved liquidity. This is a positive change and merits 1 point. Historically, Logitech's Current Ratio has generally been higher than the industry median except for certain years. In 2023, the industry median was 2.3065, indicating that Logitech remains well above its industry peers.

Number of shares not diluted?

Change in shares outstanding reflects how much ownership existing shareholders have been diluted or consolidated.

From 2022 to 2023, the number of outstanding shares for Logitech decreased from 167,447,000 to 162,302,000, resulting in a decrease in the shares outstanding. This reduction in the number of shares outstanding is generally positive as it indicates the company may be buying back shares, which can lead to increased earnings per share (EPS). Given the data for the last 20 years, it's clear that Logitech has managed its share count fairly well, reducing outstanding shares significantly from earlier highs like 205,637,856 in 2003. Therefore, assigning 1 point for the decrease in outstanding shares for 2023 is justified.

Operating of Logitech (LOGI)

Cross Margin is growing?

The change in gross margin examines how efficiently a company produces its goods. An increase indicates better cost management relative to revenues.

Logitech's gross margin decreased from 0.4129 in 2022 to 0.3788 in 2023, indicating reduced efficiency in cost management. Despite the dip, for most of the last 20 years, it has outperformed the industry median. Between 2003 and 2023, Logitech averaged a gross margin of approximately 0.3548 compared to the industry's 0.3585. Although the current downward trend is concerning, the historical strength may suggest resilience. Based on the 2023 reduction, the evaluation point is set to 0.

Asset Turnover Ratio is growing?

Asset Turnover reflects a company's efficiency at using its assets to generate sales. It is a key indicator of operational efficiency.

In 2023, Logitech (LOGI) reported an Asset Turnover of 1.195, a decline from 1.3405 in 2022. This represents a decrease in efficiency, as the company is generating fewer sales per dollar of assets. Historical data shows periods of fluctuation, with a peak of 1.731 in 2006 and a subsequent decline. This year's decrease is a concerning trend, indicating reduced operational efficiency. Thus, for Piotroski Analysis, Logitech scores 0 points in this criterion.