Last update on 2024-06-07

Lattice Semiconductor (LSCC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Discover the Piotroski F-Score analysis for Lattice Semiconductor (LSCC) in 2023, with a near-perfect final score of 8/9, showcasing the company’s robust financial health.

Short Analysis - Piotroski Score: 8

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

Lattice Semiconductor (LSCC) has achieved a Piotroski F-Score of 8, signaling strong financial health based on the criteria of profitability, liquidity, and operational efficiency. Specifically, LSCC has shown positive net income, increasing profitability trends, and positive cash flow from operations. The company also scores well on improved Return on Assets (ROA) and Operating Cash Flow surpassing Net Income, indicating robust earnings quality. Liquidity indicators such as declining leverage and an increasing current ratio point to a sound financial position. However, a slight dilution in shares was noted, slightly dimming the otherwise bright picture. Operational metrics like growing Gross Margin and Asset Turnover further underscore the company's effective management and operational efficiency.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 8, Lattice Semiconductor (LSCC) is an attractive option for investors seeking strong, undervalued stocks. The company exhibits promising trends in net income, cash flow, ROA, leverage, and operational efficiencies. While there is minor share dilution, the overall financial indicators suggest a stable and growing company. Hence, it could be worth a more detailed look if you are considering expanding or diversifying your investment portfolio.

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

Profitability of Lattice Semiconductor (LSCC)

Company has a positive net income?

Net income is a critical criterion in the Piotroski score, indicating the company's profitability. A positive net income generally represents good financial health.

Lattice Semiconductor (LSCC) reported a net income of $259,061,000 in 2023, which is a significant improvement and clearly positive. This positive net income for 2023 earns the company 1 point in the Piotroski analysis. Analyzing the data from the past 20 years, LSCC has shown a fluctuating net income history with several years in negative territory. However, the recent upward trend, particularly noted since 2019, marks a favorable shift in the company's financial performance. This trend of increasing profitability is promising and highlights the company's successful turnaround and growth trajectory in recent years.

Company has a positive cash flow?

Cash Flow from Operations (CFO) gauges a company’s ability to produce cash from its regular business activities. Positive CFO indicates that a firm's core operations are generating sufficient revenue.

For Lattice Semiconductor (LSCC), the Cash Flow from Operations (CFO) in 2023 stands at $269.588 million. This is a positive figure, which earns LSCC a point according to the Piotroski F-Score system. Reviewing the historical data over the last 20 years demonstrates a growth trajectory with occasional dips into the negatives, specifically in years such as 2005, 2006, 2007, and 2015. However, the consistent positive trend since 2016 highlights strong operational efficacy. This sustained positive cash flow underlines robust fundamentals and efficient operational management, which are essential for long-term financial health. Thus, this criterion is met favorably for LSCC, indicating a good trend.

Return on Assets (ROA) are growing?

ROA measures a company's ability to generate profits from its assets. An increasing ROA indicates improved profitability.

Lattice Semiconductor's ROA for 2023 stands at 0.316, up from 0.2346 in 2022, representing an improvement in profitability. Considering the industry median ROA of 0.4919 in 2023, Lattice's ROA is still below industry average, but the upward trend is positive. Additionally, the rise in operating cash flow from $238,806,000 in 2022 to $269,588,000 in 2023 further supports improved operational efficiency. Therefore, Lattice Semiconductor scores 1 point for an increased ROA in 2023.

Operating Cashflow are higher than Netincome?

Determine if the operating cash flow is higher than net income to assess quality of earnings.

In 2023, Lattice Semiconductor's Operating Cash Flow stood at $269,588,000, while Net Income was $259,061,000. This yields a ratio where Operating Cash Flow surpasses Net Income, thereby earning the company 1 point under this criterion. This is a favorable trend, as it suggests that the company is generating sufficient cash to support its earnings. Analyzing the past 20 years, we observe operating cash flow fluctuations from a low of -$28,496,000 in 2007 to a high of $269,588,000 in 2023, while Net Income varied significantly from -$239,816,000 in 2007 to $259,061,000 in 2023. This consistent rise in Operating Cash Flow compared to Net Income indicates improved cash generative efficiency over the years, substantiating the financial robustness of Lattice Semiconductor.

Liquidity of Lattice Semiconductor (LSCC)

Leverage is declining?

Leverage measures a company's debt level relative to its equity. It is vital for assessing financial risk since high leverage can indicate potential solvency issues.

In comparing Lattice Semiconductor's (LSCC) leverage ratios, we observe a significant decrease from 0.1782 in 2022 to 0.0128 in 2023. This marks a clear reduction in the company's reliance on debt, reflecting a de-leveraging process. Over the past 20 years, LSCC's leverage has exhibited fluctuations, reaching as high as 0.4712 in 2017. However, the marked reduction in 2023 points towards strengthened financial health and lower risk exposure. Consequently, it adds 1 point under the Piotroski score for lower leverage.

Current Ratio is growing?

Explain the criterion for Lattice Semiconductor (LSCC) and why it is important to consider

The Current Ratio has observed an increase from 2.9768 in 2022 to 3.7777 in 2023, translating into an elevation of nearly 26.86%. This increase proposes a significant improvement in Lattice Semiconductor's (LSCC) capability to cover its short-term liabilities with short-term assets, as a higher current ratio is often indicative of better liquidity. Analyzing 20 years of Current Ratio data elucidates that a company excessively deviating from the industry median (for instance, 3.4213 in 2023, compared to LSCC's 3.7777) may either indicate enhanced financial health or over-accumulation of non-productive assets. Lattice’s data historical trending generally lies above the industry median, especially peaking at 10.2993 in 2003, suggesting periods of robust liquidity maintenance. Hence, considering this upward movement in LSCC's current ratio for this year can secure 1 point in Piotroski Analyses. 'Current Ratio Increased'–good trend observed.

Number of shares not diluted?

Outstanding Shares refer to the total shares of common stock that are currently owned by investors, including restricted shares owned by the company’s officers and insiders.

The Outstanding Shares for Lattice Semiconductor have increased from 137,321,000 in 2022 to 137,694,000 in 2023. This indicates a rise in Outstanding Shares by 373,000 shares. An increase in Outstanding Shares suggests that the company may have issued additional shares, which can dilute existing shareholders' ownership. This criterion is set to 0 since the shares have increased. Historically, the company has generally seen a consistent increase in Outstanding Shares over the last 20 years, growing from 111,794,000 shares in 2003.

Operating of Lattice Semiconductor (LSCC)

Cross Margin is growing?

Change in Gross Margin analysis is pivotal as it provides insight into a company's efficiency in producing its goods relative to the cost of production. A consistently improving Gross Margin suggests the company is increasingly profitable and managing its cost structure effectively.

Based on Lattice Semiconductor (LSCC)'s Gross Margin of 0.6982 in 2023 compared to 0.6846 in 2022, the Gross Margin has indeed increased. This 1.96% growth is significant in the context of the semiconductor industry, which saw a slower growth rate. The company's 2023 Gross Margin is also substantially higher than the last 20-year industry median Gross Margin of 0.4919. This reflects positively on LSCC's operational efficiencies and potentially superior market positioning. Consequently, under the Piotroski analysis, LSCC earns 1 point for this increasing trend.

Asset Turnover Ratio is growing?

Analyze the change in Asset Turnover for LSCC and understand if it has increased, which would indicate better utilization of assets.

The Asset Turnover for Lattice Semiconductor (LSCC) has increased from 0.8659 in 2022 to 0.8992 in 2023. This improvement reflects an enhanced efficiency in utilizing the company's assets to generate sales. This metric being on an upward trend suggests that the company's management has been effective in squeezing more revenue from its asset base, which is a positive sign for potential investors. Moreover, considering the last 20 years of Asset Turnover data, LSCC has shown considerable growth from levels as low as 0.2339 in 2003 to its current level of 0.8992, which is among the highest in the two-decade period. Therefore, we assign 1 point for this criterion.