Last update on 2024-06-07

FreightCar America (RAIL) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze FreightCar America's (RAIL) Piotroski F-Score for 2023, assessing profitability, liquidity, and efficiency (Final Score: 6/9).

Short Analysis - Piotroski Score: 6

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

FreightCar America (RAIL) has been evaluated using the Piotroski F-Score, a system that assesses financial health based on profitability, liquidity, and operating efficiency. The Piotroski Score for RAIL is 6 out of 9. Key insights include: - Profitability: Negative net income in 2023 but positive cash flow. - Liquidity: An improving current ratio and declining leverage. - Operating Efficiency: Positive gross margin growth but a decline in asset turnover. This signifies mixed financial health with some positive trends in liquidity and operational cash flow, but concerns about profitability and share dilution.

Insights for Value Investors Seeking Stable Income

For potential investors, RAIL presents a mixed picture. The Piotroski Score of 6 is relatively good, but ongoing profitability challenges and recent share dilution are concerns. Positive cash flow and improving liquidity indicators are promising; however, its declining asset turnover and negative net income advise caution. Investing in RAIL might be worthwhile for those accepting higher risks for potential rewards, but further analysis and consideration of industry conditions are recommended.

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

Profitability of FreightCar America (RAIL)

Company has a positive net income?

Net income represents a company's total earnings or profit, crucial for assessing its profitability.

Based on the net income of FreightCar America (RAIL) in 2023, which is -$23,589,000, it is clear that the company is currently operating at a loss. Over the last 20 years, FreightCar America's net income has varied significantly, with some profitable years such as 2005 ($45,693,000) and 2006 ($128,733,000), followed by declines in subsequent years. The trend over the last decade has predominantly been negative, which indicates persistent profitability issues. Therefore, this criterion would receive a score of 0, as the company did not achieve positive net income in 2023. This trend is indicative of underlying challenges in maintaining profitability and suggests cautious consideration for investors.

Company has a positive cash flow?

Cash flow from operations (CFO) measures the cash generated by a company's regular operating activities. It's crucial for assessing whether a company can maintain and grow its operations.

FreightCar America's CFO for 2023 stands at $4,769,000, demonstrating a positive cash flow. Over the past 20 years, the company has seen several fluctuations in CFO, with notable peaks in 2005 ($65,814,000) and 2006 ($154,156,000). More recently, some years displayed negative CFOs, such as in 2019 (-$18,979,000) and 2020 (-$58,905,000). The positive CFO in 2023 is a favorable sign, indicating potential stability and operational efficiency. Generally, positive CFOs contribute to a healthier financial status for the company. Therefore, this criterion scores 1 point.

Return on Assets (ROA) are growing?

Change in ROA compares different years' Return on Assets, indicating company profitability; a positive change suggests improvement.

FreightCar America's ROA improved from -0.194 in 2022 to -0.1027 in 2023, marking a positive trend. Even though it's still negative, the improvement (0.0913 increase) indicates that the company is moving towards better profitability. This positive shift adds 1 point in the Piotroski Analysis. Compared to the industry median ROA, FreightCar America still lags but the upward trajectory is a positive sign. The historical data shows fluctuating ROA, suggesting volatile operational performance across years, often linked to its cyclical industry nature.

Operating Cashflow are higher than Netincome?

Compare Operating Cash Flow with Net Income for FreightCar America (RAIL)

FreightCar America's (RAIL) operating cash flow for 2023 stands at $4,769,000, significantly higher than its net income of -$23,589,000. This discrepancy implies that despite reporting a net loss, the company was able to generate positive cash flow from its core operations. Essentially, this means the company has a good inflow of cash, which can be utilized for various operational needs, helping it sustain even when profitability is a concern. This is a favorable trend as it highlights efficient operations. Therefore, we can add 1 point to the Piotroski Score for this criterion.

Liquidity of FreightCar America (RAIL)

Leverage is declining?

Leverage compares a company's debt against its equity and evaluates its financial stability.

Comparing the leverage ratios of 2022 (0.4332) and 2023 (0.1713), we observe that leverage has indeed decreased. This signifies a lower debt burden relative to equity and is typically a positive indicator of financial health. Over the last 20 years, FreightCar America's leverage has seen significant fluctuations, with an overall low level until around 2019 when it started to rise considerably, reaching a peak in 2022 before this recent decrease. This current reduction adds stability by lessening the reliance on debt, a commendable shift that generates a positive point in our Piotroski Analysis.

Current Ratio is growing?

Current Ratio measures a company's ability to pay short-term obligations with short-term assets, reflecting liquidity.

The Current Ratio for FreightCar America (RAIL) increased from 1.2161 in 2022 to 1.3135 in 2023. This improvement indicates that the company has enhanced its liquidity and is better positioned to cover its short-term liabilities. This is a positive trend as it demonstrates stronger financial health. Over the past 20 years, the company's Current Ratio has seen fluctuations, with notable highs during 2017 and 2018 when it surpassed 4.0. In comparison, the industry median has remained relatively stable, with minor fluctuations and staying below FreightCar America's ratios for the majority of the period.

Number of shares not diluted?

Change in Shares Outstanding reflects how a company's equity base evolves over time, impacting overall shareholder value.

Comparing 2022 to 2023, FreightCar America's Outstanding Shares increased from 24,838,399 to 28,366,457. This signifies a rise in shares by approximately 3.53 million. Given the Piotroski Analyses, this would result in a score of 0. An increase in Outstanding Shares often dilutes existing shareholders' value and can sometimes suggest equity raising due to financing needs. Over the last 20 years, we see fluctuating trends with major increases since 2019.

Operating of FreightCar America (RAIL)

Cross Margin is growing?

Gross Margin (GM) measures a company's financial health and profitability by revealing the percentage of revenue that exceeds the cost of goods sold.

The Gross Margin for FreightCar America (RAIL) has shown a positive trend, increasing from 0.0708 in 2022 to 0.1166 in 2023, resulting in an additional Piotroski point for the company. This increase is significant. The Gross Margin has recovered from a period of substantial volatility, including negative values in 2016 and 2017. Despite this improvement, RAIL's Gross Margin still lags behind the industry median, which is 0.3176 in 2023, revealing a gap that the company needs to bridge.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company's use of its assets in generating sales revenue.

Comparing the Asset Turnover of 1.5596 in 2023 with 1.8219 in 2022, it has decreased. Hence, it should be set to 0 points. In a broader context, examining the historic data since 2003 reveals that asset turnover has had significant fluctuations. For instance, it peaked at 4.4782 in 2006 and hit a low of 0.4422 in 2010. The current decrease could suggest issues in operational efficiency or challenges in asset utilization.