Last update on 2024-06-05

Old Dominion Freight Line (ODFL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Old Dominion Freight Line's Piotroski F-Score Analysis for 2023 shows a financial strength score of 6/9, reflecting strong profitability and liquidity.

Short Analysis - Piotroski Score: 6

We're running Old Dominion Freight Line (ODFL) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Old Dominion Freight Line (ODFL) was evaluated using the Piotroski F-Score, which ranges from 0 to 9 and assesses a company's financial strength by evaluating profitability, liquidity, and leverage. ODFL achieved a Piotroski score of 6 out of 9, indicating a relatively strong financial position. Notable strengths include the company's robust profitability, as evidenced by consistent positive net income and cash flow from operations over the past 20 years. Also, ODFL's leverage and current ratio are improving, and there has been a reduction in the number of shares outstanding, which positively impacts shareholders. However, the company saw a decrease in its return on assets, gross margin, and asset turnover ratio this past year, which could raise concerns about its operational efficiency compared to previous years and within the industry.

Insights for Value Investors Seeking Stable Income

Given that Old Dominion Freight Line (ODFL) scored 6 out of 9 on the Piotroski F-Score, it is worth considering as a potential investment. The company shows steady profitability and good liquidity, which are favorable signs for investors. However, you should also be cautious due to the recent declines in return on assets, gross margin, and asset turnover. These elements suggest there might be some operational challenges. It would be prudent to further investigate these areas or consult a financial advisor before making an investment decision.

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

Profitability of Old Dominion Freight Line (ODFL)

Company has a positive net income?

The net income criterion measures the profitability of a company. It is important to consider because consistently positive net income indicates a company's ability to generate profit and sustain operations.

In 2023, Old Dominion Freight Line (ODFL) reported a net income of $1,239,502,000, which is positive. Over the past 20 years, ODFL has demonstrated a robust profitability trend, with net income figures consistently positive. The net income has shown a significant upward trajectory since 2003, growing from $27,600,000 to the current $1.24 billion. This positive trend underscores ODFL's strong financial health and its capability to sustain high profitability. Thus, ODFL scores 1 point for this criterion.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash generated by a company's normal business operations. Positive CFO means the company is generating sufficient cash from its core activities, which is generally a positive sign.

For the fiscal year 2023, Old Dominion Freight Line (ODFL) reported a CFO of $1,569,135,000, which is positive. This is a robust indicator of the company's financial health and its ability to generate cash from its primary operations. Historically, the company has shown an improvement in CFO over the last 20 years, with values ranging from $75,064,000 in 2003 to the current $1,569,135,000. This consistent growth suggests strong operational efficiency and enhances investor confidence. Therefore, ODFL earns 1 point for this criterion, signifying a positive trend.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) is evaluated by comparing the ROA for the current year with the previous year. An increase in ROA signifies improved profitability relative to the company's total assets.

For Old Dominion Freight Line (ODFL), the ROA in 2023 is 0.2395, compared to 0.2851 in 2022. This indicates a decrease in ROA, signifying a decline in profitability relative to the company's assets. According to the Piotroski Analysis, which rewards an increase in ROA, the score for this criterion would be 0. The decreasing ROA against the backdrop of a 20-year trend and industry median, which shows industry median ROA decreasing to 0.1488 in 2023 from 0.2851, reflects broader industry challenges. In prior years, ODFL typically maintained a higher ROA than the industry median, implying strong operational efficiency despite the recent dip.

Operating Cashflow are higher than Netincome?

Operating cash flow higher than net income indicates effective cash management and liquidity.

Comparing Old Dominion Freight Line (ODFL) for the fiscal year 2023, the operating cash flow stands at $1.569 billion while the net income is at $1.239 billion. Since the operating cash flow significantly exceeds net income, this is a positive indicator, reflecting strong cash generation capabilities beyond mere accounting profits. Historically, ODFL has shown a consistent trend of positive operating cash flows, as seen from $75.1 million back in 2003 steadily increasing over the years. This results in a score of 1 for this criterion, suggesting favorable liquidity and effective management of cash operations over time.

Liquidity of Old Dominion Freight Line (ODFL)

Leverage is declining?

Change in Leverage evaluates if a company has reduced its financial risk by decreasing its reliance on debt

The leverage has decreased from 0.0165 in 2022 to 0.0109 in 2023 for Old Dominion Freight Line (ODFL). This downward trend in leverage over the recent year, and consistent decline over 20 years from a peak of 0.2935 in 2006, is reflective of responsible financial management and lower risk. Decreasing leverage indicates the company's effective debt restructuring or stronger equity position, both positive indicators for financial health. Thus, we assign 1 point in this criterion.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations. It's calculated as current assets divided by current liabilities. A higher ratio indicates improved liquidity.

The Current Ratio for Old Dominion Freight Line (ODFL) increased from 1.7625 in 2022 to 2.0992 in 2023. This reflects better liquidity and an improved ability to cover short-term obligations. Not only has ODFL surpassed its previous year's ratio, but it's significantly above the 2023 industry median of 1.3866. This upward trend in ODFL's Current Ratio signifies a healthy financial position, earning it 1 point in the Piotroski score.

Number of shares not diluted?

Change in shares outstanding is critical as dilution or buybacks can impact a company's EPS and, consequently, its stock price.

The outstanding shares for Old Dominion Freight Line (ODFL) decreased from 224,682,000 in 2022 to 218,842,490 in 2023, signifying a reduction. A decline in outstanding shares typically indicates that the company is buying back its shares, which can be a positive signal of management’s confidence in the company's future performance or an effort to reduce share dilution. In this case, adding 1 point is appropriate. Historical data shows fluctuating but generally increasing trends with a significant spike in 2020 and 2021, reinforcing the importance of understanding the causes and implications of share count changes.

Operating of Old Dominion Freight Line (ODFL)

Cross Margin is growing?

Change in Gross Margin compares a company's ability to control costs in relation to its competitors over the same period.

Old Dominion Freight Line's Gross Margin in 2023 stands at 0.3532, a decrease from 0.3604 in 2022. This indicates a modest decline in its ability to control production costs relative to its revenues. Historically, Old Dominion Freight Line has maintained a gross margin noticeably higher than the industry median, which was 0.1488 in 2023. For context, over the past two decades, the company’s gross margin reached a peak of 0.8752 in 2009 and was as low as 0.223 in 2012. Despite the slight decrease in 2023, Old Dominion Freight Line continues to outperform the industry median by a significant margin, indicating strong operational efficiency. Given the drop, the Piotroski score for this criterion is set to 0.

Asset Turnover Ratio is growing?

Asset Turnover evaluates how efficiently a company uses its assets to generate sales. Higher turnover indicates better performance.

The Asset Turnover for Old Dominion Freight Line (ODFL) decreased from 1.2961 in 2022 to 1.1334 in 2023. This trend is disappointing as it suggests less efficient asset utilization year-over-year. Comparing historic data over 20 years shows considerable fluctuation, indicating potential periods of operational challenges and efficiency improvements. This year’s decrease results in a score of 0 for this Piotroski criterion.