Last update on 2024-06-06

SBA Communications (SBAC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

SBA Communications (SBAC) achieves a Piotroski F-Score of 7/9 for 2023, indicating robust financial health with strong profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 7

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

The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position based on 9 criteria related to profitability, liquidity, and leverage. SBA Communications (SBAC) has been analyzed using this scoring system and has received a score of 7 out of 9 points. They earned points for positive net income, positive cash flow from operations, growing return on assets, operating cash flow exceeding net income, growing gross margin, and growing asset turnover ratio. However, they did not earn points for declining leverage, a growing current ratio, and no share dilution.

Insights for Value Investors Seeking Stable Income

SBA Communications (SBAC) appears to be a solid investment based on the Piotroski F-Score analysis, scoring 7 out of 9 points. The company shows strong profitability, efficient cash management, and operational improvements. However, investors should be cautious about their increasing leverage and declining liquidity ratios. If you're considering investing, it might be worthwhile to look deeper into these aspects and monitor any efforts by the company to manage debt and improve liquidity.

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

Profitability of SBA Communications (SBAC)

Company has a positive net income?

Net income measures a company's profitability. Positive net income signifies financial health and stability, while negative indicates losses.

SBA Communications (SBAC) reported a net income of $501,812,000 in 2023, which is a positive figure. Historically, the company has experienced fluctuations in net income over the past 20 years, with multiple years of negative net income, especially between 2003 and 2012. However, since 2016, the trend has been predominantly positive, culminating in the highest net income recorded in 2023. This indicates a positive shift in the company’s profitability and operational efficiency in recent years, making this trend favorable for SBAC's overall financial health and resulting in a score of 1 point for positive net income.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a key measure of a company's financial health, indicating its ability to generate cash from core business operations.

For SBA Communications (SBAC), the Cash Flow from Operations in 2023 was $1,544,393,000, which is positive. This trend suggests robust cash generation capability as we observe continuous improvement over the last 20 years. The company has transitioned from a negative CFO in 2003 to increasingly higher positive CFO figures, illustrating strong operational growth. Therefore, for this criterion, SBA Communications earns 1 point, reflecting positive cash flow operations.

Return on Assets (ROA) are growing?

Return on Assets (ROA) is a key metric that measures a company's profitability relative to its total assets. A higher ROA indicates more efficient management in generating income from assets.

In 2023, SBA Communications (SBAC) achieved a Return on Assets (ROA) of 0.0483, marking an increase from 0.0453 in 2022. This positive trend demonstrates an improvement in the company's ability to generate profit from its assets, which is a favorable sign for investors. Over the past two decades, SBAC has shown a consistent upward trajectory in operating cash flow, reaching $1,544.393 million in 2023 from -$29.808 million in 2003. Comparatively, the industry median ROA has varied but is significantly higher, indicating that while SBAC is improving, it still lags behind its peers. Nevertheless, the continued year-on-year increase, including the recent gain, merits a point in this criterion.

Operating Cashflow are higher than Netincome?

This criterion examines if a company's operating cash flow exceeds its net income, highlighting the firm's ability to generate cash through its core operations.

For SBA Communications (SBAC), the operating cash flow in 2023 is $1,544,393,000, which is significantly higher than its net income of $501,812,000 for the same year. This is a positive indicator, showcasing SBAC's robust cash-generating ability. Over the past 20 years, we observe a consistent trend of increasing operating cash flow, signifying strong operational efficiency. On the other hand, net income shows initial fluctuations and losses, turning positive more recently. This disparity suggests effective management of operating activities and expenses, resulting in improved cash reserves and liquidity. This trend is favorable and earns a score of 1 point for SBAC in the Piotroski F-Score.

Liquidity of SBA Communications (SBAC)

Leverage is declining?

Leverage measures a company's debt levels in relation to its equity, which is crucial for assessing financial risk.

The leverage of SBA Communications (SBAC) increased from 1.4062 in 2022 to 1.3309 in 2023. This upward trend indicates that the company has taken on more debt relative to its equity, which could heighten financial risk. Over the last 20 years, the leverage values have shown fluctuations, indicating sporadic periods of higher financial risk: - 2003: 0.8741 - 2010: 0.8316 - 2015: 1.1512 - 2020: 1.4377 - 2023: 1.3309 Due to the increase in leverage from 2022 to 2023, it does not earn a point for this criterion. SBA Communications should focus on managing its debt levels more conservatively to improve financial stability.

Current Ratio is growing?

The Current Ratio is essentially a liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets.

When examining SBA Communications' Current Ratio, it has decreased from 0.6928 in 2022 to 0.3552 in 2023. A higher Current Ratio indicates better liquidity and ability to meet short-term obligations, thus a lower Current Ratio is generally a negative trend. Over the last 20 years (2003-2023), SBA Communications' Current Ratio has significantly fluctuated, often underperforming the industry median. For example, in 2023, the industry median was 1.282, while SBA Communications was at 0.3552, far below the median, highlighting potential liquidity risks. Given this trend, the Current Ratio did not increase in 2023 and thus scores 0 points on the Piotroski scale.

Number of shares not diluted?

Change in Shares Outstanding refers to the difference in the total shares a company has issued to shareholders year over year.

In 2022, SBA Communications had 107,957,000 shares outstanding, which increased slightly to 108,204,000 in 2023. This represents an increase of 247,000 shares. According to the Piotroski F-Score, an increase in outstanding shares would get a score of 0, since it is often seen as a dilution of existing shareholders' value. Over the last 20 years, SBAC's shares outstanding have generally increased, moving from 52,204,000 in 2003 to 108,204,000 in 2023, indicating potential regular dilution events or capital raising activities. Therefore, the score is 0 for this criterion.

Operating of SBA Communications (SBAC)

Cross Margin is growing?

Gross margin measures a company's financial health by revealing the proportion of money left over from revenues after deducting the cost of goods sold. Higher gross margins indicate better efficiency and profitability.

For SBA Communications (SBAC), the gross margin increased from 0.7461 in 2022 to 0.7741 in 2023. This is a positive trend. Over the last 20 years, SBAC's gross margin has notably improved from a low of 0.4349 in 2003 to a high of 0.7741 in 2023. This surpasses the industry median gross margin, which was 0.4759 in 2023. Therefore, SBAC gets an additional point for increasing its gross margin.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales, reflecting operational efficiency.

SBA Communications (SBAC) witnessed a marginal increase in its Asset Turnover ratio from 0.2583 in 2022 to 0.2612 in 2023. While this increment may appear minor, it symbolizes more efficient utilization of assets to generate revenue—a positive sign for operational efficiency. Observing the historical trend over the past 20 years, SBAC's Asset Turnover has notably grown from 0.1854 in 2003 to its current state, showcasing consistent improvements with fluctuations. The increase in 2023 continues this improvement streak, albeit modestly. Thus, for this Piotroski criterion, SBAC scores 1 point.