Last update on 2024-06-07

SeaChange (SEAC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Analyze SeaChange (SEAC) with Piotroski F-Score. Get insights on profitability, liquidity, and operating efficiency for smarter investment decisions.

Short Analysis - Piotroski Score: 4

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

The Piotroski F-Score evaluates a company's financial health on a scale of 0 to 9. SeaChange (SEAC) has a score of 4, meeting only some of the criteria. SEAC shows concerns in profitability (negative net income and cash flow), declining asset efficiency (ROA), and slight decline in liquidity (current ratio). However, it has improved in leverage reduction, better cash management, increased gross margin, and asset turnover efficiency.

Insights for Value Investors Seeking Stable Income

SeaChange shows mixed performance on the Piotroski scale with several financial health concerns. The inconsistent profitability and sustained losses pose significant risks. While there are positive signs like improved cash efficiency and leverage management, these may not outweigh the negatives. Potential investors should be cautious and consider looking deeper into the reasons behind these mixed results before making an investment decision.

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

Profitability of SeaChange (SEAC)

Company has a positive net income?

Netincome represents the company's profitability. A positive net income means the company is profitable, while a negative one means it is not. Positive net income is typically a good indicator of financial health.

In 2023, SeaChange (SEAC) reported a net income of -$11,404,000, indicating a net loss for the year. This negative net income leads to a score of 0 for this criterion. A historical view of the company's net income over the last 20 years reveals a recurring pattern of losses, interspersed with occasional profitable years. Such volatility and sustained losses are concerning from a financial health perspective and highlight potential issues in operational efficiency or cost management. For example, the largest net income, reported in 2011, was $29,468,000, while the most significant loss was -$71,249,000 in 2017. The company's inability to maintain consistent profitability negatively impacts investor confidence and long-term financial stability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash that a company generates from its regular business operations. Positive CFO typically indicates a company's ability to generate sufficient cash to maintain and grow its operations, making it a crucial indicator of financial health.

In 2023, SeaChange reported a negative CFO of -$2,020,000. Historically, over the past 20 years, SeaChange's CFO has fluctuated considerably. Key points include a peak of $23,191,000 in 2004 and a significant negative figure of -$28,521,000 in 2017. The recent negative CFO trend, albeit smaller in magnitude compared to earlier years, is concerning. Sustained negative CFO can imply challenges in generating cash from core operations, which could raise red flags about the company's operational sustainability.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is an essential measure. ROA gauges how efficiently a company uses its assets to generate earnings.

For SeaChange (SEAC), the ROA in 2023 was -0.2331 compared to -0.1407 in 2022, representing a decline in ROA. Therefore, the score for this criterion is 0. This trend is not favorable, indicating that the company's efficiency in asset utilization has decreased. Over the past 20 years, SeaChange has generally exhibited negative operating cash flow, contrasting sharply with the industry median ROA, which consistently remained positive, hovering above 0.6 for most of the period. This disparity underscores challenges SEAC faces in aligning with industry norms.

Operating Cashflow are higher than Netincome?

Explain the criterion for SeaChange (SEAC) and why it is important to consider

SeaChange (SEAC), like other companies, should compare operating cash flow to net income. Operational cash flow reflects a company’s ability to generate sufficient capital to maintain and expand operations, while net income accounts for all revenues and expenses within a given period. If operating cash flow surpasses net income, it suggests effective cash management and possible hidden earnings quality, unaffected by non-cash items like depreciation. Analysis shows SEAC had an operating cash flow of -$2,020,000 compared to a net income of -$11,404,000 in 2023. While both figures are negative, the operating cash flow registers significantly higher than net income. This demonstrates better cash management, resulting in 1 additional point as per the Piotroski criteria. Over the past 20 years, SEAC’s operational cash flow peaked at $23,191,000 in 2004, while the lowest point in net income was reported in 2017 at -$71,249,000.

Liquidity of SeaChange (SEAC)

Leverage is declining?

Leverage measures a company's total debt relative to its equity, representing financial risk.

SeaChange (SEAC) has experienced a decrease in leverage from 0.0247 in 2022 to 0.0162 in 2023. This decrease is a positive signal and results in earning 1 point in the Piotroski Analysis. Historically, the leverage trend shows that SEAC has maintained relatively low leverage values, with significant spikes in 2019 and 2021. This year's improvement suggests improved financial stability with less reliance on debt, aligning with positive overall performance indicators.

Current Ratio is growing?

Measures the company's ability to cover its short-term obligations with its short-term assets. Higher ratio indicates stronger liquidity position.

Comparing the Current Ratio of SeaChange (SEAC) for the years 2022 and 2023, it slightly decreased from 3.3996 in 2022 to 3.3357 in 2023. This change from 3.3996 to 3.3357, though minor, indicates a slight decline in the company's liquidity position. Consequently, this would result in a score of 0 for this Piotroski criterion. Historically, SeaChange has maintained a robust current ratio, with values consistently surpassing the industry median, highlighting its traditionally strong liquidity. The industry median for the last 20 years has been between 1.4407 to 1.9437, significantly lower than SeaChange's ratios. Despite the slight dip, SEAC remains in a better liquidity stance compared to its industry peers.

Number of shares not diluted?

The Change in Shares Outstanding criterion analyzes the variation in the number of shares that a company has issued. This is important as it can reveal investor dilution or buyback activities, which are critical indicators of the company’s governance and shareholder value policy.

For SeaChange (SEAC), the number of outstanding shares increased from 2,351,500 in 2022 to 2,487,500 in 2023, indicating an issuance of additional shares. Considering the Piotroski Analyses' scoring method, this trend does not satisfy the criterion for a decrease in outstanding shares, scoring 0 points. Moreover, comparison to the historical trend of the past 20 years, where SEAC has shown varied fluctuations—from 26,623,000 in 2003 to 2,487,500 in 2023—indicates this recent issuance might be part of a broader strategic initiative rather than an aberration.

Operating of SeaChange (SEAC)

Cross Margin is growing?

The gross margin measures a company's manufacturing and distribution efficiency during the production process. A higher gross margin indicates a more efficient company.

In 2023, SeaChange achieved a gross margin of 0.6317, compared to 0.5987 in 2022, marking an increase. This trend is favorable, garnering 1 point in the Piotroski analysis. Historically, from 2003 to 2023, SeaChange’s gross margins have seen significant fluctuations, peaking at 0.6721 in 2018 and touching a low of 0.3805 in 2003. Comparatively, the industry median gross margin has remained relatively stable, with a slight upward trend, reaching 0.6741 in 2023. SeaChange’s recent uptick suggests improved operational efficiency and a competitive edge, potentially signaling positive future performance.

Asset Turnover Ratio is growing?

The Change in Asset Turnover criterion analyzes the company's efficiency in using its assets to generate sales. A higher asset turnover ratio compared to the previous year indicates improved efficiency and financial health.

The Asset Turnover ratio for SeaChange (SEAC) has increased from 0.5172 in 2022 to 0.6641 in 2023, adding 1 point to its Piotroski Score. This rising ratio, which reflects the company's improved efficiency in utilizing its assets to generate revenue, can be deemed positive. Historical data over the past 20 years shows variability, peaking at 0.8933 in 2009 and falling to a low of 0.3568 in 2021. The improvement in 2023 suggests a rebound towards better operational efficiency.