Last update on 2024-06-05

Publicis Groupe (PU4.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Detailed Piotroski F-Score analysis of Publicis Groupe (PU4.F) for 2023. Understand the financial standing with a final score of 7/9. Learn key criteria and insights.

Short Analysis - Piotroski Score: 7

We're running Publicis Groupe (PU4.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Publicis Groupe (PU4.F) underwent a Piotroski F-Score analysis and achieved an overall score of 7 out of 9. Here's what we found: 1. Profitability: The company shows a positive net income of €1.312 billion for 2023 and has been profitable for nearly 20 years, except in 2015. The positive Cash Flow from Operations of €2,048 million supports this trend. 2. Liquidity: The current ratio slightly improved from 0.9371 in 2022 to 0.9414 in 2023, but still remains below the industry median. Leverage increased, signaling higher dependency on debt. 3. Operating Efficiency: Gross Margin took a severe hit by plummeting to 0 in 2023 from 42.74% in the previous year. Return on Assets and Asset Turnover also showcased modest to declining trends. Overall, the company seems to be financially solid but faces challenges in debt and operational efficiency.

Insights for Value Investors Seeking Stable Income

Given Publicis Groupe's strong profitability and positive cash flow, it appears to be a stable investment. Nonetheless, the recent decrease in Gross Margin and the increasing leverage imply some operational risks and debt concerns. If you’re considering investing in this stock, it would be advisable to keep these factors in mind, weigh the historical financial health, and monitor ongoing performance improvements and risks.

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

Profitability of Publicis Groupe (PU4.F)

Company has a positive net income?

Net income is the total earnings of a company after taxes which indicates its profitability.

Publicis Groupe (PU4.F) shows a positive net income for 2023, amounting to €1.312 billion. This is a strong indicator of the company's profitability and overall financial health. In reviewing historical data, we see that the firm has consistently recorded positive net income over the last two decades, barring the year 2015 when they recorded a loss of €527 million. This consistency speaks volumes about the company's ability to generate profits over a prolonged period, making the 2023 figure a continuation of a generally upward trajectory. Hence, for Piotroski's F-Score, Publicis Groupe earns 1 point for positive net income.

Company has a positive cash flow?

Cash Flow from Operations (CFO) determines the cash a company generates from its regular business activities. Positive CFO indicates internal financing through which a company sustains its operations, rather than relying on external financial assistance.

For Publicis Groupe (PU4.F), the Cash Flow from Operations (CFO) in 2023 stands at €2,048 million. A positive CFO is undeniably a good sign, as it suggests that the company can finance its operations from internally generated funds. When looking at the historical CFO data over the past 20 years, Publicis Groupe has consistently maintained positive CFO figures, showcasing a robust trend in operational cash generation. Specifically, the CFO has shown a marked increase from €558 million in 2003 to €2,048 million in 2023, reflecting a substantial elevation in operational efficiency and financial health. Therefore, based on the Piotroski criteria, Publicis Groupe secures a full mark—1 point—for maintaining a positive CFO, which further augments its financial robustness and investment attractiveness.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) is a measure of a company's efficiency in generating profit from its assets. An increase in ROA suggests improved profitability.

Publicis Groupe's ROA increased from 0.0356 in 2022 to 0.0361 in 2023, which is a positive sign of the company's profitability. Although this increase is relatively small, it indicates a trend of improved efficiency in asset utilization. This improvement, although modest compared to the industry median ROA of around 0.4568 in 2023, is a step in the right direction. Historically, Publicis Groupe's operating cash flow has generally risen from €558 million in 2003 to over €2.04 billion in 2023, indicating robust cash generation capabilities, which may support further enhancements in ROA.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is a sign of strong financial health.

For the year 2023, the Operating Cash Flow (OCF) for Publicis Groupe (PU4.F) stands at €2,048 million, while the Net Income is €1,312 million. The criterion is met, as the OCF is higher than the Net Income, adding 1 point in the Piotroski F-Score. This positive differential indicates robust cash generation, enhancing liquidity. The additional data reveals that over the past 20 years, except for 2020, OCF has consistently outpaced net income, underscoring sustainable cash flow management. Thus, the trend is healthy and exemplary for investors.

Liquidity of Publicis Groupe (PU4.F)

Leverage is declining?

Change in leverage measures if the company has reduced its dependency on debt financing. A decrease signifies improved financial health.

In 2022, Publicis Groupe had a leverage ratio of 0.1445, which increased to 0.1213 in 2023. Consequently, the leverage has increased, suggesting a higher dependency on debt. This trends negatively for financial stability, often foreshadowing increased financial risk if prolonged.

Current Ratio is growing?

The current ratio is a liquidity metric that compares a company's current assets to its current liabilities. It is important to assess the company's ability to meet short-term obligations.

In comparing the current ratios for Publicis Groupe, we see a slight increase from 0.9371 in 2022 to 0.9414 in 2023. While this indicates marginally improved liquidity, it remains below the industry's median current ratio of 1.1433 for 2023. For the Piotroski score, this increment does warrant an addition of 1 point. Yet, it's important to note that Publicis Groupe's current ratio has consistently been below the industry median for the past 20 years, highlighting persistent liquidity issues. Therefore, the incremental improvement, although positive, does not significantly alter the existing liquidity challenges.

Number of shares not diluted?

Shares outstanding indicate the total number of shares currently owned by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

The outstanding shares for Publicis Groupe (PU4.F) have increased from 250,972,110 in 2022 to 250,706,485 in 2023. This is an increase in the number of shares outstanding, which is generally not advantageous from a Piotroski perspective, as it could signal potential equity dilution. Considering the last 20 years of data, the company saw fluctuating outstanding shares with peaks and troughs but has seen a relatively stable share count recently. However, the increase in 2023 warrants a score of 0 in the Piotroski analysis for this criterion.

Operating of Publicis Groupe (PU4.F)

Cross Margin is growing?

Gross Margin is an essential indicator of a company's financial health, representing the percentage of revenue exceeding the cost of goods sold. It signifies how efficiently a company uses its resources to produce goods and services. A higher Gross Margin typically suggests better profitability and cost management.

For Publicis Groupe (PU4.F), the Gross Margin has dramatically decreased from 0.4274 in 2022 to 0 in 2023. While the Gross Margin was 42.74% in 2022, indicating a healthy state, the plummeting to 0 in 2023 is alarming. This signifies that Publicis Groupe made no profit from its revenue after accounting for the cost of goods sold, hence indicating severe inefficiencies or potential disruptions in its business operations. This trend is particularly concerning in comparison to the industry's median, which remains around 45.68% in 2023, showing the company lagging far behind its peers. This criterion scores 0 points as Gross Margin has substantially decreased, which is a negative trend.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures the efficiency at which a company uses its assets to generate sales.

The Asset Turnover for Publicis Groupe (PU4.F) decreased slightly from 0.413 in 2022 to 0.4077 in 2023, a reduction of roughly 1.27%. This suggests a slight decline in the company's efficiency at using its assets to produce revenue. Over the last 20 years, the Asset Turnover ratio has fluctuated, peaking at 0.4214 in 2013 and reaching a low of 0.3435 in 2020. This mixed trend indicates that while Publicis Groupe has managed its resources relatively well over the long term, the recent decline should be monitored closely. Overall, for the Piotroski Analysis, since the Asset Turnover decreased, it receives a score of 0.