Last update on 2024-06-06

NXP Semiconductors (NXPI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

NXP Semiconductors (NXPI) has a Piotroski F-Score of 5/9 in 2023, highlighting moderate financial health through profitability and liquidity metrics.

Short Analysis - Piotroski Score: 5

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

NXP Semiconductors (NXPI) has a Piotroski F-Score of 5 out of 9, indicating an average financial health based on profitability, liquidity, and leverage. The company shows solid profitability with a positive net income and strong cash flow from operations. Its leverage ratio has improved, and the number of shares outstanding has decreased. However, the return on assets, current ratio, and asset turnover ratios have declined, which indicates some efficiency and liquidity concerns. Overall, while there are strong areas, some financial metrics suggest caution.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, NXP Semiconductors (NXPI) might be an intriguing investment for those looking at profitability and cash flows. However, potential investors should also be wary of its declining efficiency and liquidity metrics. It may be worth further investigation, especially to understand the reasons behind the drops in return on assets and asset turnover ratios before making any investment decisions.

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

Profitability of NXP Semiconductors (NXPI)

Company has a positive net income?

Assessing net income allows investors to determine whether the company is profitable, which is crucial for long-term investment decisions.

The net income for NXP Semiconductors in 2023 is $2,797,000,000, which is positive, adding 1 point according to the Piotroski F-Score criteria. This positive trend reflects the company’s sustained profitability over the last few years, signifying strong financial health and effective management strategies. Over the last 20 years, 2023 represents an all-time high in net income, demonstrating a significant turnaround from previous years, especially when considering negative values in years like 2008 (-$3,600,000,000) and 2012 (-$115,000,000).

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a key measure of a company’s financial health as it shows if a company’s everyday operations are generating enough cash.

For the year 2023, NXP Semiconductors (NXPI) reported a CFO of $3.513 billion. This figure is positive, which is a crucial indicator of the company's solid operational health. Positive CFO denotes that the company generates sufficient cash from its core business activities, which can be used to pay debts, reinvest in the business, or return capital to shareholders. Analyzing the last 16 years, NXPI has shown a consistent upward trend in CFO since 2008, with the exception of years with negative values in 2008 (-$622 million) and 2009 (-$745 million). This trend, particularly the healthy CFO figure in 2023, scores a 1 point in the Piotroski F-Score, reflecting a favorable criterion for operating cash flow.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability relative to its total assets. It is an indicator of how efficiently a company uses its assets to generate earnings. Comparing ROA over time helps investors evaluate the company's performance and operational efficiency.

The ROA for NXP Semiconductors (NXPI) decreased from 0.1264 in 2022 to 0.1175 in 2023. Therefore, NXPI does not earn a point under this criterion, as it indicates decreased efficiency in generating profits from its assets. This decrease represents a negative trend in the company's operational efficiency. Additionally, when compared against the industry median ROA (0.4919 in 2023), NXP is lower, showcasing that NXPI's asset utilization is below industry standards. Therefore, keeping this drop and the relative position against the industry in mind, the lower ROA in 2023 impacts its operational assessment negatively.

Operating Cashflow are higher than Netincome?

The criterion examines if operating cash flow is higher than net income to determine earnings quality.

For the fiscal year 2023, NXP Semiconductors (NXPI) reported an operating cash flow of $3,513 million and a net income of $2,797 million. Since the operating cash flow is higher than the net income, NXPI scores 1 point for this criterion. Historically, an increasing trend is observed in the operating cash flows, especially in the last decade, with 2023 figures showing a significant increase compared to earlier years. This trend reflects solid earnings quality and suggests that the company is efficient in generating cash from its operational activities, which is beneficial for sustaining growth and managing liabilities.

Liquidity of NXP Semiconductors (NXPI)

Leverage is declining?

Leverage is the ratio of a company's debt to its equity. Lower leverage suggests a company is using less debt to finance its operations, which is generally seen as financially healthy.

Comparing NXP Semiconductors' leverage of 0.4805 in 2022 to 0.4178 in 2023, the leverage has decreased, showing an improvement in the company's financial health. A decrease in leverage from 0.4805 to 0.4178 indicates that NXP Semiconductors has reduced its debt relative to its equity, lowering its financial risk. Hence, for the Piotroski Analysis, we add 1 point for this criterion. Over the past 20 years, NXP's leverage fluctuated, peaking at 0.5775 in 2008 and falling to its lowest at 0.2418 in 2017. This trend reflects the company's ongoing efforts to manage its debt levels prudently.

Current Ratio is growing?

Current Ratio assesses a company's ability to pay off its short-term liabilities with its short-term assets, impacting liquidity.

For 2023, the Current Ratio stands at 1.9129, a decrease from 2022's 2.1208. This decline indicates that NXP Semiconductors' liquidity has moderately decreased. This is crucial since a firm's capacity to meet short-term obligations is fundamental for its financial health. Falling below the prior year's figure suggests potential liquidity challenges. On the other hand, comparing this to the industry's median which stands at 3.4213 in 2023, NXP appears less solvent relative to peers. Given the drop from 2022, this criterion doesn’t merit an additional point.

Number of shares not diluted?

Assessing the change in the number of shares outstanding is crucial as it impacts shareholder value. A company's share buyback can indicate a return of value to shareholders and a confidence in the company's future earnings.

The shares outstanding for NXP Semiconductors decreased from 261,879,000 in 2022 to 258,381,000 in 2023. This reduction translates to a decrease of approximately 3,498,000 shares, indicating a return of value to the shareholders. Over the last 20 years, the trend shows fluctuations, but since 2018, there's been a steady decrease from 328,606,000 shares, reflecting a consistent share buyback strategy. Thus, according to Piotroski's criterion, NXP Semiconductors scores 1 point in this category, demonstrating a positive move.

Operating of NXP Semiconductors (NXPI)

Cross Margin is growing?

Change in Gross Margin is essential as it reveals management's ability to manage costs and enhance profitability.

Upon comparing the Gross Margin for NXP Semiconductors, we observe a slight decrease from 0.5693 in 2022 to 0.5689 in 2023. While this decline might seem negligible, it's crucial to note that the trend is slightly downward. However, historically, the company has seen a substantial rise in its Gross Margin over the last 20 years from 0.2238 in 2008 to the current figure. Compared to the industry median, which stood at 0.4919 in 2023, NXP Semiconductors outperformed consistently, demonstrating a stronger cost management ability. Despite the marginal decline this year, the overall robustness in Gross Margin puts the company in a commendable position. Therefore, for the Piotroski score in 2023, the point allocation would be 0.

Asset Turnover Ratio is growing?

The asset turnover ratio measures a firm's efficiency in using its assets to generate sales. A higher ratio indicates better performance.

The asset turnover for NXP Semiconductors decreased from 0.5989 in 2022 to 0.5579 in 2023. This suggests a decline in efficiency in utilizing its assets to generate sales, marking a potential concern. Over the past 20 years, the highest observed ratio was 0.8465 in 2014, which shows how current levels are notably lower.