Last update on 2024-06-07

Universal Display (OLED) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Explore the Piotroski F-Score analysis of Universal Display (OLED) for 2023. Discover financial insights on profitability, liquidity, and leverage - Final Score: 5/9.

Short Analysis - Piotroski Score: 5

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

The Piotroski F-Score for Universal Display (OLED) is calculated based on nine criteria, which include profitability, liquidity, and leverage. For 2023, Universal Display scored 5 out of 9: +1 for positive net income, +1 for positive cash flow, +1 for decreasing leveraged ratio, +1 for an increasing current ratio, and 0 points for other criteria which were not met, such as return on assets, operating cash flow vs net income, change in shares outstanding, gross margin, and asset turnover ratio.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, Universal Display (OLED) shows a mixed financial position. While the company demonstrates strengths in profitability and liquidity, it also shows weaknesses in operational efficiency and asset management. This mixed score suggests that investors may need to delve deeper into the areas of concern before making any investment decisions. It's worth considering if you're looking at long-term profitability and growth potential but exercise caution regarding the current operational and asset utilization weaknesses.

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

Profitability of Universal Display (OLED)

Company has a positive net income?

Checking if net income for Universal Display (OLED) is positive is crucial as it indicates profitability. A positive net income shows that the company is earning more than its expenses, which is vital for long-term sustainability and growth.

For the year 2023, Universal Display (OLED) reported a net income of $203,011,000. This is a positive value, which is a good sign. Over the last 20 years, the net income trend illustrates significant improvement. While the company reported losses in earlier years (e.g., -$19,139,736 in 2007), consistent positive income has been observed from 2011 onwards. The current positive net income of $203,011,000 reflects ongoing profitability. For the Piotroski F-Score, this criterion receives 1 point.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash generated or used in the course of regular operations of the business. A positive CFO implies healthy operational efficiency and profitability.

The CFO for Universal Display (OLED) in 2023 stands at $154.8 million. This figure is undeniably positive, which is a good indicator for the company's operational health, therefore earning it 1 point in the Piotroski score. Historically, the company's CFO has illustrated an upward trajectory since 2009, with occasional dips. This positive trend over the last 20 years highlights the company's resilience and growing operational prowess. The positive $154.8 million CFO in 2023 continues to affirm this promising trend.

Return on Assets (ROA) are growing?

Return on Assets (ROA) evaluates a company's profitability relative to its total assets.

Unfortunately, Universal Display's (OLED) ROA in 2023 was 0.1268, a decline from 0.1401 in 2022. This reveals no added point for the Piotroski criterion of Change in ROA. The declining trend is clearly a red flag for OLED investors. In contrast, the industry median ROA in 2023 was 0.4718, highlighting that OLED significantly underperforms compared to its peers. This piece of data makes the negative trend in ROA even more critical for long-term investment considerations.

Operating Cashflow are higher than Netincome?

The criterion involves comparing the company's operating cash flow to its net income. If the operating cash flow exceeds net income, it indicates robust quality of earnings.

For 2023, Universal Display (OLED) had an operating cash flow of $154.8 million and a net income of $203 million. In this case, the operating cash flow is lower than the net income. This results in a score of 0 points for this criterion. Over the past 20 years, the company's operating cash flow has shown significant variability. For instance, in 2003, the operating cash flow stood at -$5.8 million, while in recent years it has turned positive, reaching $154.8 million in 2023. Despite this turnaround, the net income figures for the past few years have typically been higher. This demonstrates that while the company is generating substantial cash, the net income figures also reflect considerable non-cash items, which need close examination to understand underlying profitability and cash-generation trends.

Liquidity of Universal Display (OLED)

Leverage is declining?

Change in leverage examines whether a company's debt load relative to its assets has increased or decreased, impacting financial stability.

The leverage ratio for Universal Display (OLED) decreased from 0.0189 in 2022 to 0.0137 in 2023. This reduction in leverage indicates that OLED has lowered its debt burden, which is a positive sign for the company's financial health. Historically, the company's leverage has shown variability, peaking at 0.0568 in 2004 and generally staying below 0.02. The current decline is therefore a favorable trend, earning OLED 1 point in the Piotroski Analysis.

Current Ratio is growing?

Compare the Current Ratio of Universal Display (OLED) between two fiscal years to determine if there has been an increase. An increasing current ratio can indicate improving liquidity.

The Current Ratio for Universal Display (OLED) has increased from 6.6284 in 2022 to 7.7185 in 2023, indicating improved liquidity for the company. This boost in the Current Ratio earns the company 1 point in the Piotroski Score. Historically, the company's Current Ratio has generally been higher than the industry median, especially striking during years like 2011, where it reached 18.5632 against an industry median of 3.2951. This trend suggests that Universal Display has consistently maintained robust short-term financial health compared to its peers, and the latest increase continues this positive trajectory. Therefore, the trend for this criterion is indeed good.

Number of shares not diluted?

Change in Shares Outstanding means tracking how a company’s issued shares have increased or decreased over a period. It is an important metric to analyze the company’s financial health as issuing more shares can dilute the stock price whereas buying back shares is often seen as a positive indicator.

Based on the available data, Universal Display (OLED) saw the number of outstanding shares increase from 47,390,352 in 2022 to 0 in 2023. This indicates an increase in the outstanding shares, but given the number listed as zero, it may suggest a reporting anomaly or error for 2023. Typically, if shares had truly decreased, it would improve shareholder value as each share represents a larger piece of the company. Given the data shows an increase or an anomaly, this would deduct 1 point under Piotroski Score criteria for outstanding shares. Historically, the pattern shows oscillations with an increase over the last 20 years between 22,428,219 in 2003 and 47,390,352 in 2022. Nature of 2023 data as zero, therefore, is unusual.

Operating of Universal Display (OLED)

Cross Margin is growing?

Gross Margin represents the proportion of revenue that exceeds the cost of goods sold (COGS). It is a critical indicator of a company's financial health and efficient production.

In 2023, Universal Display (OLED) reported a gross margin of 0.7651, down from 0.7926 in 2022. This decrease indicates a drop in the company's efficiency in managing its production costs and sales prices, reflecting potential challenges in either increasing revenue or managing COGS effectively. Over the past 20 years, the company's gross margin has generally remained well above the industry median, which was 0.4718 in 2023 compared to OLED's 0.7651. The decline in gross margin for 2023 results in 0 points according to the Piotroski criteria, illustrating a weakening position relative to its historical performance and potentially increased pressure from competition or operational inefficiencies.

Asset Turnover Ratio is growing?

Asset turnover measures how efficiently a company uses its assets to generate sales. It's crucial to evaluate operating performance and efficiency.

Universal Display's Asset Turnover ratio decreased from 0.4111 in 2022 to 0.3601 in 2023. This downward trend suggests a slight decline in the efficiency with which the company is utilizing its assets to generate revenue. Although the decrease may not be substantial, it does highlight inefficiencies in asset utilization compared to the previous year. Historically, Universal Display's Asset Turnover has fluctuated, with significant increases past 2008. The decrease in 2023 may reflect changes in operational dynamics, market conditions, or investments in less productive assets. Consequently, the Piotroski F-score for this criterion is 0.