Last update on 2024-06-05

Teledyne Technologies (TDY) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Teledyne Technologies (TDY) Piotroski F-Score analysis for 2023. Final score: 6/9, indicating financial strength in profitability, liquidity, and leverage.

Short Analysis - Piotroski Score: 6

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

Based on the Piotroski F-Score, which ranges from 0 to 9, Teledyne Technologies (TDY) scored a 6. This analysis helps investors understand the financial strength of the company. Let's break it down into three main parts: profitability, liquidity, and operating efficiency. For profitability, the company has positive net income and cash flow from operations, both showing strong growth trends over the last 20 years. Return on Assets (ROA) is also increasing. However, Operating Cash Flow was lower than Net Income this year. For liquidity, while leverage is declining (a good thing), the Current Ratio has deteriorated, meaning the company is less able to cover short-term debts with short-term assets, and shares have increased causing potential dilution. In terms of operating efficiency, the Gross Margin and Asset Turnover Ratio are both on a positive trend. They show the company is improving core profitability and operational efficiency.

Insights for Value Investors Seeking Stable Income

While Teledyne Technologies (TDY) displays a strong position in profitability and shows promising signs in efficiency, the decline in liquidity and potential for share dilution are concerning. Given its Piotroski score of 6, which is above average, TDY can be considered a relatively healthy company but with some areas needing attention. For investors, this stock might be worth further investigation, especially to understand the reasons behind the liquidity issues and share dilution. If these areas are managed well in future quarters, TDY could be a solid pick. Due diligence is key.

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

Profitability of Teledyne Technologies (TDY)

Company has a positive net income?

Net income represents a company's profit after all expenses and taxes have been deducted. It is a key indicator of profitability.

Teledyne Technologies (TDY) reported a net income of $885.7 million in 2023. This is a positive value and thus adds 1 point to the Piotroski score. An analysis of the Net Income over the last 20 years shows a growing trend, going from $29.7 million in 2003 to $885.7 million in 2023, showcasing a significant growth trajectory. Apart from a minor dip in 2010, the net income has demonstrated a generally consistent increase, marking a positive trend and indicating strong profitability and efficient management.

Company has a positive cash flow?

Cash Flow from Operations (CFO) refers to the cash a company generates from its regular operating activities, excluding secondary or unrelated sources of revenue.

For Teledyne Technologies (TDY) in 2023, the CFO was $836.1 million, which is positive. This indicates robust operational efficiency and provides a cushion for investments or to weather economic downturns. Historically, Teledyne's CFO has shown a solid growth trajectory over the last 20 years, rising from $56.7 million in 2003 to $836.1 million in 2023. Such positive CFO trends reflect strong operational management and consistent revenue generation from core business activities. Therefore, Teledyne earns 1 point for its positive CFO, highlighting its effective cash flow management.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company’s profitability relative to its total assets over time. It helps investors understand how well the company is utilizing its assets to generate earnings.

Teledyne Technologies (TDY) experienced an increase in its ROA from 0.0548 in 2022 to 0.0613 in 2023. This positive trend adds 1 point under the Piotroski F-Score. The increase signifies improved asset efficiency and profitability, highlighting the company's effective management in deploying its resources. Over the last 20 years, TDY’s operating cash flow has seen a gradual increase, with significant jumps in years like 2012 and between 2020 and 2021. Comparing this with the industry’s median ROA which stands well above 0.4, TDY's ROA still lagging behind the industry median, but the upward trend is promising. The increase in ROA demonstrates good financial health and potentially favorable future performance.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income evaluates a firm's ability to generate cash from operations rather than relying on accounting profits.

For Teledyne Technologies (TDY) in 2023, the Operating Cash Flow is $836.1 million whereas the Net Income is $885.7 million. The Operating Cash Flow is lower than the Net Income, hence this criterion scores 0 points. Analyzing the historical data: Over the past 20 years, Teledyne has seen a significant rise in both operating cash flow and net income, with occasional mismatches where net income was higher. In 19 out of the 20 years (95%), the operating cash flow was predominantly reflective of true earnings over net income. For investors, although the current year's operating cash flow is lower, the stability and growth over the long term should be reassured.

Liquidity of Teledyne Technologies (TDY)

Leverage is declining?

Change in Leverage tells us whether a company is taking on more or less debt relative to its equity. Lower leverage generally indicates a healthier balance sheet and lower financial risk.

The leverage of Teledyne Technologies (TDY) in 2022 was 0.2522, whereas in 2023 it decreased to 0.182. Since the leverage has decreased, this is a positive indicator, and we add 1 point according to the Piotroski F-Score criteria. Historically, the leverage of TDY has fluctuated over the last 20 years, with substantial peaks in 2015 (0.2801) and a notable decrease to 0.182 in 2023, reflecting a significant reduction in financial risk.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. A higher ratio indicates stronger liquidity.

Teledyne Technologies (TDY) saw its Current Ratio decrease from 1.8497 in 2022 to 1.6881 in 2023. This indicates a reduction in the company's ability to cover its short-term liabilities with its short-term assets. Over the last 20 years, TDY's Current Ratio has generally remained below the industry median, which stood at 2.6482 in 2023. Thus, TDY's liquidity position has weakened year-over-year and continues to trail the industry standard. This decline is not favorable for the criterion, earning 0 points.

Number of shares not diluted?

Change in Shares Outstanding evaluates whether the company has repurchased shares, which implies financial health and benefits existing shareholders by increasing their ownership share.

The Outstanding Shares of Teledyne Technologies increased from 46.8 million in 2022 to 47.1 million in 2023, indicating a rise of 0.64%. Over the last 20 years, the number of outstanding shares has generally trended upwards. This recent increase could be perceived negatively for shareholders because it signals potential dilution. However, considering the context such as any strategic acquisitions or financing needs, it might be justified. For Piotroski's scoring, this increase results in a score of 0.

Operating of Teledyne Technologies (TDY)

Cross Margin is growing?

Gross Margin measures the proportion of money left over from revenues after accounting for the cost of goods sold. It's crucial because it reflects the core profitability of a company.

In 2023, Teledyne Technologies (TDY) reported a Gross Margin of 0.4329, compared to 0.4269 in 2022, marking an increase. Historically, TDY's gross margin has consistently shown an upward trend from 0.2427 in 2003 to 0.4329 in 2023. During this time, its Gross Margin has exceeded the industry's median in most years, especially in earlier years. The industry median in 2023 was 0.4813—a substantial difference. Despite this, the increment in TDY's Gross Margin from 2022 signals improved cost management or better pricing power, adding 1 point to the Piotroski score. This consistent increase is favorable as it suggests effective cost controls and scaling capabilities.

Asset Turnover Ratio is growing?

The increase in Asset Turnover, a key efficiency ratio, reflects better utilization of assets to generate sales.

The Asset Turnover ratio of Teledyne Technologies (TDY) has increased from 0.3793 in 2022 to 0.3902 in 2023. This improvement, although incremental, signals a positive trend in the company's operational efficiency. The higher Asset Turnover ratio implies that Teledyne Technologies is generating more revenue per dollar of assets compared to the previous year. Over the last two decades, the trend has seen a significant decrease from as high as 2.0525 in 2003. However, the recent uptick in 2023 marks a slight but encouraging reversal from the downward trajectory, potentially indicative of the company's efforts to optimize asset utilization. Given the increase, we would assign 1 point to this criterion in the Piotroski analysis, reflecting this positive momentum.