Last update on 2024-06-07

Regeneron Pharmaceuticals (REGN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Regeneron Pharmaceuticals (REGN) Piotroski F-Score Analysis 2023 reveals a solid financial position with a score of 6/9, showing strength in liquidity and operating efficiency.

Short Analysis - Piotroski Score: 6

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

We evaluated Regeneron Pharmaceuticals (REGN) based on the Piotroski F-Score, which helps in identifying strong, undervalued stocks through criteria focusing on profitability, liquidity, and operating efficiency. The company scored 6 out of 9 on the Piotroski F-Score. 1. Profitability: Positive net income ($3.9536B) and Cash Flow from Operations ($4.594B), but a decline in Return on Assets (ROA). 2. Liquidity: Increased Current Ratio (5.69) and decreased shares outstanding, but increased leverage ratio. 3. Operating Efficiency: Decline in Gross Margin and Asset Turnover. Overall, the analysis reveals robust profitability and liquidity despite some concerns about efficiency and leverage.

Insights for Value Investors Seeking Stable Income

Regeneron Pharmaceuticals (REGN) shows strong profitability and liquidity with a Piotroski F-Score of 6, indicating it is reasonably financially healthy. The decline in Return on Assets, and increased leverage are minor concerns. However, the improvements in net income and operational cash flow, along with a strong current ratio and decreasing shares outstanding, make it a good candidate for further consideration by investors, especially for those seeking strong fundamentals with the potential for growth.

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

Profitability of Regeneron Pharmaceuticals (REGN)

Company has a positive net income?

Net income is a vital measure of profitability that signifies whether a company is making money.

Regeneron Pharmaceuticals (REGN) reported a net income of $3,953,600,000 in 2023, which is vastly positive. Over the last 20 years, the company has moved from negative earnings in the mid-2000s to increasingly robust, positive earnings from 2012 onwards. This trajectory illustrates a strong growth trend. With the reported positive net income, REGN earns 1 point for this criterion in the Piotroski analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash a company generates from its regular business operations. Consistently positive CFO reflects good operational health and the ability to fund operations without external financing.

In 2023, Regeneron Pharmaceuticals (REGN) reported a Cash Flow from Operations of $4.594 billion, which is positive. This is a good indicator of the company's liquid operational health. Historically, REGN has displayed fluctuating CFOs with significant negativity in the early 2000s, hitting lows like -$141.682 million in 2011 but showing marked improvement over the last decade. Consistently positive CFO in recent years reinforces confidence in the company's core operations and financial sustainability, adding 1 point for this criterion.

Return on Assets (ROA) are growing?

Change in ROA criterion analyzes if there is an improvement or worsening in the Return on Assets of the company from the previous year. This metric is crucial as it indicates how efficiently a company is using its assets to generate earnings. An increasing ROA suggests better management and utilization of assets.

Regeneron Pharmaceuticals (REGN) showed a decrease in its Return on Assets (ROA) from 0.1588 in 2022 to 0.1269 in 2023. This trend is unfavorable for the ROA criterion as it indicates poorer efficiency in using its assets to generate earnings compared to the previous year. To put this in context, the industry median ROA in 2023 was 0.4518, highlighting that REGN's asset efficiency is significantly below the industry average. This decline suggests that while the company remains profitable, its efficiency has deteriorated, necessitating a point deduction.

Operating Cashflow are higher than Netincome?

Positive operating cash flows exceeding net income indicates that the company's profits are not derived from accounting adjustments, but from actual cash-generating activities.

For the year 2023, Regeneron Pharmaceuticals reported an Operating Cash Flow of $4.594 billion, juxtaposed against a Net Income of $3.9536 billion. Clearly, the Operating Cash Flow surpasses Net Income. This trend is positive as it suggests that the company’s earnings are backed by strong cash flows and not merely by accounting adjustments. Historical context reveals considerable evolution; starting from negative cash flows in the early 2000s, the company has shown robust growth, achieving significant positive cash flows in recent years. Therefore, Regeneron earns a full point on this Piotroski criterion.

Liquidity of Regeneron Pharmaceuticals (REGN)

Leverage is declining?

Change in leverage measures the company's ability to reduce its long-term debt compared to its equity. It's a sign of financial stability.

The leverage of Regeneron Pharmaceuticals (REGN) has increased from 0.0925 in 2022 to 0.0817 in 2023, indicating a 13.5% jump in leverage. Historically, REGN's leverage has significantly fluctuated, peaking at 0.4723 in 2005 and reaching its lowest at 0 in both 2007 and 2018. An increased leverage suggests more dependency on debt over equity, often signaling potentially higher financial risk, likely due to increased borrowings or a reduction in equity – both of which need careful monitoring by investors.

Current Ratio is growing?

Change in Current Ratio assesses liquidity by comparing a company's current assets to its current liabilities and indicates financial health.

In 2023, Regeneron's Current Ratio increased to 5.69 from 5.0565 in 2022, marking a positive trend with an uptick. This increase adds 1 point based on the Piotroski criteria framework, signaling improved liquidity. When comparing these ratios with the industry median of 5.7831 for the same period, Regeneron is slightly below the industry benchmark, yet the upward trend remains a positive indicator.

Number of shares not diluted?

Outstanding shares refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

The outstanding shares of Regeneron Pharmaceuticals (REGN) have decreased from 107,100,000 in 2022 to 106,700,000 in 2023. This reduction, though marginal, implies that the company has likely engaged in share buybacks, a strategy often aimed at returning capital to shareholders and improving financial metrics like earnings per share (EPS). In this case, the lower number in 2023 aligns with a shareholder-friendly move, adding 1 point for this criterion. The historical data over the last two decades shows substantial growth in outstanding shares up until about 2012, followed by fluctuating periods, which could be attributed to various corporate actions including additional issuances and buybacks. An ongoing decrease in the number of shares over recent years highlights a strategic focus on value consolidation rather than dilutive growth.

Operating of Regeneron Pharmaceuticals (REGN)

Cross Margin is growing?

Gross Margin is an essential indicator of a company's financial health, representing the portion of revenue that exceeds the cost of goods sold. A higher Gross Margin signifies better efficiency in production and cost management.

The Gross Margin for Regeneron Pharmaceuticals (REGN) has slightly decreased from 0.8718 in 2022 to 0.8616 in 2023. This minor decline suggests slight inefficiencies or increased costs in the production or supply chain. Given the stability over recent years, this change could be a one-off event rather than a concerning downward trend. Historically, Regeneron has consistently outperformed the industry median, which stands at 0.4518 in 2023 compared to Regeneron's 0.8616. This highlights Regeneron's superior cost management and operational efficiency despite the recent decrease.

Asset Turnover Ratio is growing?

The Asset Turnover ratio indicates how effectively a company utilizes its assets to generate sales. An increase implies better efficiency in asset utilization.

Comparing the Asset Turnover of 0.4211 in 2023 against the 0.4455 in 2022, it is evident that the ratio decreased. Hence, no point is added as per the Piotroski F-Score criteria. Historically, Regeneron's asset turnover has been volatile, peaking at 0.8657 in 2015 and now sitting at a lower 0.4211, suggesting either reduced efficiency or the impact of new asset acquisitions.