Last update on 2024-06-04

Siemens (SIE.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Analyze Siemens (SIE.DE)'s financial health for 2023 with a Piotroski F-Score of 8/9, reflecting strong profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 8

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

The Piotroski F-Score ranges from 0 to 9 and evaluates a company's financial health using criteria related to profitability, liquidity, and operating efficiency. Siemens (SIE.DE) was analyzed against this system and scored an impressive 8 out of 9. The company consistently showed positive net income and increasing operating cash flow, both of which indicate good profitability. While Siemens' leverage increased slightly, indicating higher financial risk, other factors like a reduced number of outstanding shares, an increasing gross margin, and an improved asset turnover ratio make it look strong from an investment standpoint.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Siemens (SIE.DE) appears to be a solid investment option. The high score of 8 out of 9 reflects strong financial health, profitability, and operational efficiency. However, potential investors should be slightly cautious of the increased leverage. Overall, it is recommended to look into Siemens as a promising stock investment.

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

Profitability of Siemens (SIE.DE)

Company has a positive net income?

One of the criteria of Piotroski Analysis is checking if the Net Income is positive. Positive Net Income indicates a company's profitability.

For the year 2023, the Net Income of Siemens (SIE.DE) stands at €7,949,000,000, which is decidedly positive. Therefore, based on this criterion alone, Siemens earns the full 1 point. Observing the historical data over the last 20 years, Siemens has managed to consistently maintain a positive Net Income, with variations in figures depending on market conditions and internal factors. The lowest Net Income in these 20 years was in 2005 (€2,248,000,000), and the highest was in 2023 itself, emphasizing a trend of growth in profitability. This sustained positive net income over such an extended period is a strong positive sign, reflecting Siemens' ongoing capacity to generate profit even in challenging market environments.

Company has a positive cash flow?

Operating cash flow (CFO) measures the cash generated by a company's regular operational activities. It is a critical indicator of a company's capability to generate sufficient cash to maintain and grow operations without needing external financing.

For the fiscal year 2023, Siemens (SIE.DE) reported an impressive operating cash flow of €12,239 million. This increase from previous years noticeably supports the business's ability to generate enough cash from its operations to potentially fund new investments, pay dividends, reduce debt, or create a buffer for future downturns. When examining the additional data spanning two decades, Siemens shows a continuous positive cash flow from operations. It has grown from €5,712 million in 2003 to over double in 2023. Such a trend is a robust indicator of financial health, stability, and prudent financial management, hence earning a point in the Piotroski Analysis.

Return on Assets (ROA) are growing?

Change in ROA is a measure of how well a company is utilizing its assets to generate earnings. A higher ROA value in successive years indicates improving profitability relative to the company's asset base, which is a positive financial signal.

Siemens (SIE.DE) showed an increase in its Return on Assets (ROA) from 0.0256 in 2022 to 0.0536 in 2023. This marks an improvement and the point assigned is 1. Specifically, the company's ROA more than doubled within a year, indicating enhanced asset utilization and profitability. Siemens' ROA trend aligned with improvements seen in its operating cash flow over the years, moving from €5,712M in 2003 to €12,239M in 2023. Notably, while Siemens' ROA remains below the industry median which was 0.3492 in 2023, the company's significant year-on-year improvement signifies strong progress.

Operating Cashflow are higher than Netincome?

Criterion assesses whether Siemens' operating cash flow is higher than its net income.

For fiscal year 2023, Siemens (SIE.DE) reported an operating cash flow of \\u20ac12.24 billion and a net income of \\u20ac7.95 billion. Since the operating cash flow exceeds the net income, Siemens qualifies for 1 point under this Piotroski criterion. Evaluating historical data over the last two decades, Siemens' operating cash flow demonstrated a consistent upward trajectory, indicating robust operational efficiency. For instance, in 2003, the operating cash flow was only \\u20ac5.71 billion, highlighting a commendable growth rate. This consistency reinforces Siemens' strong cash-generating capabilities relative to its net earnings, positioning the firm favorably in terms of liquidity and financial flexibility.

Liquidity of Siemens (SIE.DE)

Leverage is declining?

The Piotroski F-Score's Change in Leverage criterion examines the year-over-year variation in the company's leverage ratio. It is essential because a reduction in leverage generally indicates lower financial risk and healthier balance sheet.

For Siemens (SIE.DE), the leverage increased from 0.2903 in 2022 to 0.2696 in 2023. Such a change signifies higher financial risk, indicating a slight decline in the company's balance sheet health. Over the last 20 years, the leverage has exhibited considerable fluctuation, notably spiking significantly after the 2020 pandemic, peaking at 0.3067 in 2020 before beginning a downtrend. However, the increase from 2023 compared to 2022 means the criterion does not score a point for Siemens in this evaluation.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity and financial health.

The Current Ratio for Siemens has decreased slightly from 1.3782 in 2022 to 1.3505 in 2023. This indicates a minor reduction in Siemens' liquidity position. The decline in current ratio may not be alarming, as it remains relatively close to previous years’ levels, showing it's consistently above 1.2. However, it's essential to contrast Siemens' current ratio with the industry median. Over the last 20 years, Siemens has often reported a current ratio below the industry median, which stood at 1.7757 in 2023. This consistent below-median performance might suggest room for improvement in liquidity management.

Number of shares not diluted?

The criterion looks at the change in the number of shares outstanding over a period. A decrease in shares outstanding is usually a positive signal, as it indicates share buybacks, which can boost shareholder value by reducing dilution.

The outstanding shares of Siemens (SIE.DE) decreased from 801,338,000 shares in 2022 to 791,538,000 shares in 2023, which is a reduction of 9,800,000 shares. This reduction in the number of outstanding shares is a positive trend for the stock, indicating a share buyback strategy aimed at increasing shareholder value. Historically, Siemens' outstanding shares have seen fluctuations, but the recent decrease aligns well with the company's approach to improving financial metrics. Hence, based on Piotroski Analysis, this criterion adds 1 point.

Operating of Siemens (SIE.DE)

Cross Margin is growing?

Gross Margin compares the Gross Profit to the Revenue. It measures the efficiency of a company's production process and is a critical indicator of financial health and business quality. An increasing Gross Margin reflects better cost management, contributing to higher profitability.

In 2023, Siemens reported a Gross Margin of 0.3813, up from 0.3591 in 2022. This improvement marks an increase of 0.0222, translating to approximately a 6.18% rise year-over-year. The steady climb in 2023 places Siemens above the Industry Median Gross Margin of 0.3492, indicating superior cost control and production efficiency. This upward trend is a strong positive aspect for investors, signaling sustained profitability and competitiveness in the industrial sector. Thus, Siemens earns a point for the enhanced Gross Margin in 2023.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency in utilizing its assets to generate revenue. A higher ratio indicates better performance.

In 2023, Siemens (SIE.DE) achieved an Asset Turnover of 0.5245, an increase from 0.4949 in 2022. This uptick in the ratio signifies enhanced asset utilization, bolstering its ability to convert assets into revenue. Historically, although Siemens' Asset Turnover ratio peaked at 0.8869 in 2003, it has since experienced a general downward trend. However, recent data marks a positive shift with a consistent improvement from 2020's low of 0.4031 to 2023's 0.5245, adding 1 point to the Piotroski Score. This trend mirrors Siemens’ strategic shifts and operational enhancements.