Last update on 2024-06-07

SGL Carbon (SGL.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Comprehensive Piotroski F-Score Analysis of SGL Carbon (SGL.DE) for 2023, including profitability, liquidity, and operational metrics with a 6/9 final score.

Short Analysis - Piotroski Score: 6

We're running SGL Carbon (SGL.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

SGL Carbon (SGL.DE) was assessed using the Piotroski F-Score, which evaluates a company's profitability, liquidity, and operating efficiency through 9 criteria. The company scored a 6, which is above average but not exceptional. Key details include a positive net income of €41 million in 2023, a positive cash flow from operations of €163.8 million, and an improved current ratio. However, there were declines in ROA and asset turnover, an increase in leverage, and no reduction in share count. Gross margin also slightly decreased, indicating some operational concerns.

Insights for Value Investors Seeking Stable Income

With a Piotroski score of 6, SGL Carbon is in a reasonably healthy financial position but is not without its issues. Its positive net income and cash flow are promising, but investors should be cautious of declining ROA, increased leverage, and reduced asset efficiency. If you are considering investing, it would be wise to monitor the company for improvements in these areas. Conduct further research and consider industry comparisons before making any decisions.

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

Profitability of SGL Carbon (SGL.DE)

Company has a positive net income?

Net income measures a company's profitability, calculated as revenue minus expenses, taxes, and costs. Positive net income indicates profitability, critical for financial health.

For 2023, SGL Carbon (SGL.DE) reported a net income of €41,000,000, which is positive. This positive net income is a favorable indicator, reflecting the company's profitability. Net income trends over the past 20 years for SGL Carbon show varied results, including significant losses in some years, such as 2013 and 2015, but also notable profits in others, like 2007 and 2021. Improvement in net income over time suggests better financial management or market conditions. For the Piotroski analysis, this criterion earns the company 1 point, affirming its profitable operations for the year 2023.

Company has a positive cash flow?

Cash Flow from Operations (CFO) denotes the cash a company generates from its core business activities. It is important because it indicates the firm's ability to generate sufficient cash to maintain operations and invest in its growth.

SGL Carbon's CFO for 2023 was €163.8 million, which is indeed positive. Over the last 20 years, the company experienced fluctuating CFOs, with negative years in 2012 (-€1.9 million), 2013 (-€39.8 million), 2014 (-€14.4 million), and 2015 (-€48.1 million). The positive CFO in 2023 signifies a healthy operational efficiency and stability. This positive trend is beneficial as it suggests a continuous improvement from the previous years' performances and adds 1 point to the Piotroski score.

Return on Assets (ROA) are growing?

Change in ROA compares the return on assets from one year to the next. It is a measure of profitability relative to a company's total assets. A rising ROA indicates improved efficiency in generating earnings.

The Return on Assets (ROA) for SGL Carbon in 2023 was 0.0278, compared to 0.0888 in 2022. This shows a decrease rather than an increase. Therefore, based on the Piotroski Analysis, zero points are awarded for this criterion. An impressive upward trajectory in operating cash flow over the past few years (e.g., $163.8 million in 2023) was not sufficient to offset the decline in ROA this year. Given that the industry median ROA for 2023 was 0.2238, SGL Carbon is significantly underperforming its peers in asset efficiency. This downward trend in ROA suggests a need for introspection into asset utilization or operational processes to identify and rectify any inefficiencies.

Operating Cashflow are higher than Netincome?

The criterion checks if the company's operating cash flow is higher than its net income.

For SGL Carbon in 2023, despite a net income of approximately €41 million, the operating cash flow surges to approximately €163.8 million. This trend is a positive indicator, as it adds 1 point to the Piotroski score. The importance of this metric lies in its ability to validate income through actual cash generation. Robust cash flow from operations suggests solid business fundamentals and efficient cash management, which is crucial for long-term sustainability and growth.

Liquidity of SGL Carbon (SGL.DE)

Leverage is declining?

Change in leverage examines the variation in a company's use of debt over time. This metric is crucial as it impacts financial stability and risk levels.

The leverage for SGL Carbon increased from 0.2026 in 2023 compared to 0.2412 in 2022. This indicates a 19% rise in leverage, which is negative against the Piotroski criteria. A high leverage means more funds are required to meet debt obligations, possibly affecting profitability and operational flexibility negatively. Historically, leverage has fluctuated within a range from 0.0 to 0.4318 in the last 20 years, with recent years stabilizing below 0.35. Therefore, the current increase in leverage might raise concerns over future risk and financial stability.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities. It indicates the company's ability to pay off short-term obligations. A higher ratio signals better liquidity.

In 2023, SGL Carbon's Current Ratio increased to 2.7587 from 2.6165 in 2022. This improvement, with the ratio now well above the industry median of 1.5873, suggests an enhanced ability to cover short-term liabilities with current assets. With averages historically fluctuating, this positive change of about 0.1422 points highlights increasing liquidity strength and stability for the company. Therefore, according to the Piotroski Score, we add 1 point for this criterion.

Number of shares not diluted?

The change in shares outstanding indicates whether the company is issuing more shares, which might signal dilution, or buying back shares, which could suggest confidence in its financial stability.

For SGL Carbon (SGL.DE), the number of outstanding shares has remained constant from 2022 to 2023 at 122,270,977 shares. Over the past 20 years, SGL Carbon exhibited volatility in share count, including sharp increases, notably in 2005 and 2017. The stability in recent years might indicate a phase of consolidation. However, as there has been no reduction in the shares outstanding from 2022 to 2023, this criterion scores 0 under the Piotroski analysis method.

Operating of SGL Carbon (SGL.DE)

Cross Margin is growing?

Change in Gross Margin is a critical indicator of a company's operational efficiency and pricing strategy. It shows how well a company is managing its production costs relative to its revenues.

For SGL Carbon (SGL.DE), the Gross Margin in 2023 was 0.2163, a slight decrease from the Gross Margin of 0.2233 in 2022. This decline suggests a marginal decrease in operational efficiency or an increase in production costs relative to the revenue. Over the last 20 years, SGL Carbon's Gross Margin has fluctuated significantly, reaching as high as 0.2365 and dropping to as low as 0.1655. When compared to the industry median Gross Margin over the same period, SGL has generally performed below the median, which was 0.2238 in 2023. Therefore, SGL Carbon receives 0 points for this criterion in the Piotroski Analysis.

Asset Turnover Ratio is growing?

Asset Turnover measures how efficiently a company uses its assets to generate sales. It's important because it indicates the productivity of the company's assets.

The Asset Turnover for SGL Carbon (SGL.DE) in 2023 is 0.7376, compared to 0.7953 in 2022. This marks a decrease in Asset Turnover, thereby setting the criterion point to 0. Given SGL Carbon's historical data over the last 20 years, it becomes evident that the Asset Turnover ratio has fluctuated but generally trended downward from highs of 0.8529 in 2005 to lows such as 0.41 in 2016. The decrease from 2022 to 2023 could indicate a relative worsening in asset efficiency, raising concerns particularly when viewed against the broader historical volatility.