Last update on 2024-06-07

Sodexo (SJ7.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Comprehensive 2023 Piotroski F-Score analysis for Sodexo (SJ7.F) with an impressive score of 8/9. Detailed insights into profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 8

We're running Sodexo (SJ7.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Sodexo (SJ7.F) performed well on the Piotroski F-Score, receiving a score of 8 out of 9. This score is derived from a thorough analysis of the company's profitability, liquidity, and operating efficiency. Specifically, Sodexo has a positive net income and cash flow, improved ROA, strong operating cash flow, reduced leverage, an increasing current ratio, and a reduction in outstanding shares. The only area where Sodexo fell short was in the gross margin, which saw a slight decrease from 2022 to 2023.

Insights for Value Investors Seeking Stable Income

Given the high Piotroski F-Score of 8, which indicates a strong financial position and operational efficiency, Sodexo appears to be a strong and stable investment. The company has shown resilience in recovering from the pandemic and maintaining positive financial metrics across most criteria. Thus, it is worth considering for investors looking for a financially stable and potentially undervalued stock. However, potential investors should monitor the company's gross margin and industry comparisons to ensure the investment aligns with their financial goals.

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

Profitability of Sodexo (SJ7.F)

Company has a positive net income?

Check if Netincome of 794000000 in 2023 is postive or negativ. If the Netincome is postive add 1 point if not set it to 0.

For the fiscal year 2023, Sodexo (SJ7.F) reported a net income of €794,000,000, which is positive and thus warrants a score of 1 for this criterion. A positive net income indicates that the company has managed to generate profit after accounting for all expenses, highlighting effective cost management and revenue generation. Examining the historical net income data over the past two decades, we can see that Sodexo has mostly maintained a positive net income, barring a significant dip to €-315,000,000 in 2020. This dip could be attributed to extraordinary circumstances, possibly linked to the global economic impact of COVID-19. From 2003 to 2023, net income values largely show a growth trajectory, affirming the company's resilience and robust operational model despite occasional fluctuations. Therefore, the positive net income reported in 2023 not only marks a recovery from the pandemic-induced downturn but also aligns with the company's long-term financial health.

Company has a positive cash flow?

CFO indicates the capital a company generates from normal business operations. A positive CFO is crucial as it means the company can cover its expenses, invest in growth, and cushion against unforeseen financial difficulties.

For Sodexo (SJ7.F), the CFO stands at €1,376 million in 2023, which is positive. This trend is favorable. Reviewing historical data, Sodexo has managed to maintain positive CFO figures consistently over the past 20 years, showcasing stable operational efficiency. In 2019, the CFO was €1,268 million, which dropped to €632 million in 2020 due to the global pandemic but rebounded to €1,376 million in 2023, marking a strong recovery. This resilience enhances investor confidence. Hence, according to this criterion, Sodexo earns 1 point.

Return on Assets (ROA) are growing?

The change in ROA criterion is important as it highlights the firm's profitability relative to its total assets over time.

The ROA of Sodexo (SJ7.F) increased from 0.0348 in 2022 to 0.0381 in 2023. This upward trend shows an improvement in asset utilization efficiency and profitability. Looking at historical data, Sodexo's ROA has been steadily rising over the last few years, indicating improved operational performance. However, when compared to the industry median ROA of 0.2903 in 2023, Sodexo's ROA is significantly lower, which suggests room for improvement relative to competitors. Given the positive year-over-year growth, we attribute 1 point to this criterion.

Operating Cashflow are higher than Netincome?

This criterion compares the cash generated by a company's core operations to its net income, indicating liquidity and profit quality.

For 2023, Sodexo's (SJ7.F) Operating Cash Flow stands at €1,376 million, while its Net Income is reported at €794 million. As the Operating Cash Flow is significantly higher than the Net Income, this reflects a solid liquidity position and high quality of earnings. Specifically, Operating Cash Flow exceeds Net Income by approximately 73%, which is a positive trend, especially when considering cash flow is a more reliable indicator of financial health since it is less susceptible to non-cash items. Over the past 20 years, Sodexo has generally maintained a strong Operating Cash Flow relative to Net Income, although there were fluctuations, for example during 2020 when the company reported negative net income. Nonetheless, the 2023 figures position it well in terms of financial robustness.

Liquidity of Sodexo (SJ7.F)

Leverage is declining?

Change in Leverage measures a company's propensity to increase or decrease its debt relative to its equity. A decrease in leverage indicates a stronger ability to meet financial obligations with equity rather than debt.

For Sodexo (SJ7.F), the leverage has decreased from 0.3076 in 2022 to 0.2742 in 2023. This decrease in leverage implies a positive trend as it indicates that the company is less dependent on debt, and thus, has strengthened its financial stability. Over the last 20 years of leverage data, there have been only a few instances where the leverage was this low, reinforcing that this is a good sign for the company's financial health. Therefore, based on this criterion, one point is added.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its current assets. A ratio higher than 1 indicates good short-term financial health.

In 2023, Sodexo's Current Ratio was 1.162, up from 1.0931 in 2022. This improvement indicates that Sodexo's short-term financial health has strengthened, as the company now has more current assets to cover its short-term liabilities compared to the previous year. Over the last 20 years, Sodexo's Current Ratio has fluctuated, typically remaining below the industry median. This recent increase is a positive trend and earns 1 point according to the Piotroski F-Score criteria.

Number of shares not diluted?

The change in outstanding shares criterion evaluates whether a company's shares outstanding have decreased from one period to the next. A decrease is generally positive as it may indicate buybacks, increasing the value per share.

For Sodexo (SJ7.F), the shares outstanding were 146,295,576 in 2022 and decreased to 146,127,620 in 2023. This represents a reduction in outstanding shares, which is a positive signal for investors because it could imply that the company is repurchasing stock—a move often associated with confidence in the company's financial health and a strategy to increase the value per share. Examining the 20-year trend, shares decreased significantly from 162,127,698 in 2003 to 146,127,620 in 2023, suggesting a long-term strategy of share repurchase or consolidation. Hence, Sodexo earns 1 point for this criterion.

Operating of Sodexo (SJ7.F)

Cross Margin is growing?

The change in Gross Margin examines the company's efficiency and profitability by comparing Gross Margin over consecutive years.

In 2023, Sodexo reported a Gross Margin of 0.1202 compared to 0.1212 in 2022, exhibiting a slight decrease. This represents no improvement in the company's efficiency in managing production costs relative to sales. Hence, this criterion scores 0 points. Furthermore, when compared to the industry median Gross Margin figures over the past 20 years, it becomes apparent that Sodexo has historically maintained a substantially lower Gross Margin than its industry peers, indicating potential challenges in its cost structure or pricing strategy.

Asset Turnover Ratio is growing?

Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue. A rise in this ratio indicates better asset utilization.

In 2023, Sodexo's Asset Turnover increased to 1.0853 from 1.0154 in 2022. This increase is favorable as it suggests that Sodexo is utilizing its assets more efficiently to generate revenue. Historical data shows the Asset Turnover has fluctuated, reaching as high as 1.5743 in 2006 and hitting a low of 0.959 in 2021, indicating a recovery post-pandemic.