Last update on 2024-06-06

ONEOK (OKE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

ONEOK (OKE) shows strong financial health in 2023 with a Piotroski F-Score of 7/9, indicating profitability, positive cash flow, and improved operational performance.

Short Analysis - Piotroski Score: 7

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

The Piotroski F-Score is a 9-point scale that measures a company's financial strength through profitability, liquidity, and operating efficiency. ONEOK (OKE) has achieved a score of 7. Key profitable metrics include a positive net income of $2.659 billion, a strong operating cash flow of $4.421 billion, and an increased Return on Assets (ROA). The company also has higher operating cash flow than net income, affirming operational efficiency. In terms of liquidity, the analysis shows a declining leverage ratio which is favorable, despite missing a point due to an increase in outstanding shares indicating potential dilution. Operating metrics indicate a significant improvement in gross margin, though asset turnover has recently decreased.

Insights for Value Investors Seeking Stable Income

With a score of 7 out of 9, ONEOK (OKE) demonstrates strong financial health and profitability. The company's efficient cash flow and profitability indicators make it an attractive investment. However, potential dilution from the issuance of new shares and decreasing asset turnover require caution. Overall, based on these criteria, ONEOK (OKE) appears to be a worthwhile investment with positive long-term potential. It's recommended for investors to consider adding it to their portfolios, keeping in mind the noted concerns.

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

Profitability of ONEOK (OKE)

Company has a positive net income?

The criterion checks if the company's net income for the fiscal year is positive, which indicates profitability.

The net income for ONEOK in 2023 is $2,659,000,000, which is clearly positive. This is a strong indicator of the company's financial health and ability to generate profit. Over the last 20 years, ONEOK has consistently reported positive net income, showing a pattern of profitability. This criterion yields 1 point due to the positive net income.

Company has a positive cash flow?

Cash Flow from Operations (CFO) evaluates a company's ability to generate revenue through its core business activities, an essential indicator of financial health.

For ONEOK (OKE), the CFO in 2023 stands at $4,421,000,000, which is notably positive. This figure, compared to its historical earnings, demonstrates a remarkably strong performance. Particularly in recent years, ONEOK's CFO has shown a substantial upward trajectory, increasing from $2,546,000,000 in 2021 to $4,421,000,000 in 2023, suggesting robust operational performance. This positive cash flow underscores the efficacy of ONEOK’s operational model. Given the data stretch from 2003 and seeing that the firm had only a few years of minimal or negative CFO early on, the current CFO level speaks volumes about its matured consistency in generating cash. Hence, ONEOK earns a well-deserved point for this criterion.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures the profitability of a company relative to its total assets. Higher ROA indicates efficient management and better profitability.

For ONEOK, the ROA saw an increase from 0.0717 in 2022 to 0.0775 in 2023, thus earning 1 point under the Piotroski criteria. This signifies that ONEOK has improved its efficiency in generating profit from its assets. When we look at the industry median over the last two decades, we observe that although ONEOK's ROA is lower than the industry median of 0.4123 in 2023, the improvement in ROA is a positive indicator. One historical trend worth noting is the stable incline in ONEOK’s operating cash flow over the past 20 years, peaking at $4.4 billion in 2023. This improvement highlights the company’s steady enhancement in operational performance.

Operating Cashflow are higher than Netincome?

The criterion evaluates if a company’s operating cash flow is higher than its net income.

The operating cash flow for ONEOK (OKE) in 2023 stands at $4,421,000,000 while the net income is $2,659,000,000. Since the operating cash flow is indeed higher than the net income, this supports a positive outlook. Historical data shows growth in both metrics, demonstrating consistent and healthy cash flow operations over the past two decades, further emphasizing financial stability.

Liquidity of ONEOK (OKE)

Leverage is declining?

Change in Leverage evaluates the shift in financial debt proportion over time, helping assess the company's financial risk.

ONEOK (OKE) has experienced an increase in leverage from 0.5236 in 2022 to 0.4802 in 2023. This suggests a decrease in leverage and, according to the Piotroski score methodology, would not warrant adding a point, leading to a score of 0. However, in this case, the leverage has actually decreased, improving financial stability within the firm. This is underscored by the previous 20-year data showing that recent years have seen higher leverage compared to the earlier 2000s. Adjustments since 2019 show commitment towards debt reduction and better financial health management.

Current Ratio is growing?

Explain the criterion for ONEOK (OKE) and why it is important to consider

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. A higher ratio indicates a greater level of liquidity and financial health.

Number of shares not diluted?

Evaluate the trend in shares outstanding for ONEOK (OKE) as it indicates the company's equity structure changes, affecting investor ownership proportions.

From 2022 to 2023, ONEOK's Outstanding Shares increased from 447,500,000 to 484,300,000. This reveals a trend that suggests issuance of additional shares. A higher number of shares outstanding, as seen with the increase to 484,300,000, potentially signals dilution for existing shareholders, which is typically viewed unfavorably. Therefore, according to the Piotroski criterion, we assign 0 points for this evaluation.

Operating of ONEOK (OKE)

Cross Margin is growing?

The Change in Gross Margin criterion compares the gross margin of a company over consecutive years. An increase in gross margin indicates better cost control and pricing power, essential aspects for sustained profitability.

ONEOK's gross margin improved from 0.172 in 2022 to 0.2817 in 2023, a significant 64% increase. Historically, ONEOK's gross margin fluctuates, but this improvement aligns with a better industry trend, as the industry median for 2023 stands at 0.4123. However, despite the increase, ONEOK's gross margin is still below the industry median, pointing to both progress and opportunities for better cost management. Result: 1 point.

Asset Turnover Ratio is growing?

Change in Asset Turnover examines whether a company is using its assets more efficiently. Improved Asset Turnover reflects better utilization.

The Asset Turnover for ONEOK (OKE) decreased from 0.9328 in 2022 to 0.515 in 2023. This indicates less efficient utilization of the company's assets. Historically, ONEOK's Asset Turnover has fluctuated, peaking at 1.4735 in 2005, but generally trending downward, making this recent decrease part of a longer-term trend. Given this, ONEOK would not receive a point for this criterion.