Last update on 2024-06-06

Sealed Air (SEE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Sealed Air (SEE) Piotroski F-Score 2023 analysis. Understand financial health with a score of 5/9, covering profitability, liquidity, and efficiency metrics.

Short Analysis - Piotroski Score: 5

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

The Piotroski F-Score is a 9-point rating system used to determine the financial health of a company. Sealed Air (SEE) was evaluated using this system and got a score of 5 out of 9—a moderate performance. Despite positive net income and cash flow from operations, the company's reduced Return on Assets (ROA), declining gross margins, and increased leverage are red flags. Sealed Air has improved its current ratio and decreased the number of outstanding shares, showing some aspects of financial robustness, but the drop in asset turnover is concerning.

Insights for Value Investors Seeking Stable Income

Sealed Air (SEE) has both positives and negatives according to the Piotroski F-Score analysis. With a score of 5, it shows moderate financial health. The consistent positive cash flow and recent share buyback are good signs, but the rising debt and dropping ROA and asset turnover indicate potential risks. If you're a cautious investor, you might want to look into other options too, but if you believe in Sealed Air's recovery strategy, it could still be a reasonable investment. Continue reviewing financials and consult a financial advisor to better understand the potential risks and rewards.

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

Profitability of Sealed Air (SEE)

Company has a positive net income?

The criterion evaluates if the net income of the company is positive.

Sealed Air (SEE) reported a net income of $341.6 million in 2023, demonstrating a positive earnings figure for the year. Given that the net income is positive, Sealed Air scores 1 point on this criterion. Examining the historical trends over the past 20 years, the company's net income has experienced significant fluctuations. The net income dropped to a substantial net loss of -$1.41 billion in 2012 due to various economic pressures. However, there has been a consistent recovery post-2012, with Sealed Air reporting positive net incomes consecutively from 2013 onwards. The peak was in 2017 with a net income of $814.9 million, indicating robust corporate health during that period. The recent positive figure for 2023, albeit lower compared to its peak, solidifies the company’s ability to maintain profitability, which is a favorable sign for investors.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash generated by a company's regular business operations. Positive CFO is being tracked favorably in Piotroski analysis as it signifies robust revenue generation.

Sealed Air's (SEE) CFO for 2023 stands at $516.2 million, which indicates a positive cash flow from operations. This translates into 1 point according to the Piotroski criteria. Over the last 20 years, Sealed Air has maintained generally positive CFO, with the exception of 2014 when the CFO was -$201.9 million. The recent result of $516.2 million continues this positive trend, although it's lower than the preceding year ($613.3 million in 2022). Ultimately, a positive CFO signals a healthy cash generation ability for SEE.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) assesses a company's ability to generate profit relative to its total assets. An increasing ROA signals higher profitability and asset efficiency.

Comparing the ROA of Sealed Air (SEE) from 2022 (0.079) to 2023 (0.0509), there is a substantial decrease. This signifies a degradation in profitability and asset efficiency, likely reflecting issues in operational efficiency or higher costs that weren't counterbalanced by revenue growth. Historically, considering the last 20 years, while Sealed Air’s ROA has experienced fluctuations, it rarely aligned with the industry median, which stands significantly higher, averaging around 0.2142. Thus, this trend is concerning, setting the point to 0.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income and its significance.

With Operating Cash Flow at $516.2 million and Net Income at $341.6 million in 2023, Operating Cash Flow indeed surpasses Net Income. In Piotroski’s F-Score model, this merits a point, reflecting favorable financial health since cash from operations is more reliable than accounting income which may include non-cash items. Historically, Sealed Air's cash flow has been consistently positive except for 2014 with dips in certain years and similar patterns in Net Income with some volatility noted in 2012.

Liquidity of Sealed Air (SEE)

Leverage is declining?

A change in leverage is an essential metric in understanding a company's debt management.

In comparing the leverage of 0.529 in 2022 to 0.6361 in 2023, we observe an increase in leverage. This indicates that Sealed Air has taken on more debt relative to its equity. Historically, the company has experienced fluctuations, but the current trend suggests a higher risk associated with increased debt. For the Piotroski score, this results in no point added here, since an increase in leverage is generally viewed negatively. Thus, it scores 0 for this criterion.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets.

Observing Sealed Air (SEE), the Current Ratio increased from 1.0168 in 2022 to 1.3011 in 2023, indicating an improvement. With this increase, SEE scores 1 point on the Piotroski Scale. Historically, SEE has experienced fluctuations in its Current Ratio, notably higher during the 2009 economic downturn (1.4461) and achieving its highest ratio in 2014 at 1.555. Comparing this trend with the industry median, which stands at 1.5762 in 2023, SEE is slightly lagging behind the median but showing positive momentum. This improved liquidity position suggests a better capacity to handle short-term liabilities than the previous year, a positive sign for investors and stakeholders.

Number of shares not diluted?

The criterion examines the change in the number of outstanding shares, which reflects whether a company is issuing more shares or potentially buying back shares. This is important because an increase in shares can dilute existing shareholders, whereas a decrease can indicate a buyback, a positive signal.

In 2023, Sealed Air had 144.4 million outstanding shares, down from 145.9 million in 2022. This reduction of 1.5 million shares (approximately 1.03%) suggests that Sealed Air may have engaged in share buybacks. This is a positive signal for shareholders as buybacks can enhance shareholder value by reducing dilution. Over the last 20 years, the company’s share count has displayed variability, but the recent decline aligns positively with previous lower share counts observed particularly from 2008 onwards. Hence, for this criterion, Sealed Air scores 1 point.

Operating of Sealed Air (SEE)

Cross Margin is growing?

Change in Gross Margin assesses the profitability and efficiency of the company's core operations over time.

The Gross Margin for Sealed Air (SEE) decreased from 0.3142 in 2022 to 0.299 in 2023. This represents a decline in profitability and can be seen as negative performance according to this criterion, hence 0 points should be awarded. Notably, Sealed Air’s Gross Margin, despite decreasing, is still substantially higher than the industry median of 0.222 in 2023, which underscores a relatively strong positioning in its sector. Historically, Sealed Air’s Gross Margin has fluctuated over the past 20 years but has generally remained above the industry median, highlighting stronger profitability relative to its peers.

Asset Turnover Ratio is growing?

asset turnover, which indicates a company's efficiency in using its assets to generate revenue, is a crucial measure of performance.

Comparing the Asset Turnover of 0.8183 in 2023 to 0.9068 in 2022, we observe a decline. This suggests a reduction in Sealed Air's efficiency in using its assets to generate revenue. The trend receives 0 points as the turnover has not increased. The twenty-year data shows some fluctuations, but this recent drop is significant.