Last update on 2024-06-06

Tesla (TSLA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Analyze Tesla (TSLA) 2023 Piotroski F-Score highlighting its financial position with a score of 3/9, evaluating profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 3

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

The Piotroski F-Score is used to evaluate Tesla's financial health based on nine criteria involving profitability, liquidity, and leverage. Tesla showed strong net income ($14.999B) and positive cash flow from operations ($13.256B). However, their ROA has declined, their net income is higher than operating cash flow, leverage increased, and asset turnover and gross margin both declined. Meanwhile, Tesla's current ratio improved, indicating better liquidity. Lastly, the number of shares increased, signaling potential shareholder dilution.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score, Tesla's score of 3 suggests financial weak points despite strong profitability and liquidity. Areas of concern include declining ROA, higher leverage, and decreased efficiency (asset turnover and gross margin). The increase in shares outstanding further indicates potential dilution for shareholders. Tesla might not be the best low-risk investment currently, so aspiring investors should conduct further research and consider these factors before investing in Tesla.

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

Profitability of Tesla (TSLA)

Company has a positive net income?

Net income is the total profit of a company after all expenses and taxes, indicating the company's profitability.

Tesla's net income for 2023 stands at $14,999,000,000, a notable achievement symbolizing sustained growth. Analyzing historical data, Tesla transitioned from losing $781,570,000 in 2007 to achieving consistent profitability since 2020. The 2023 net income positions Tesla as financially robust, showcasing improved operational success and solidifying its market leadership.

Company has a positive cash flow?

Positive Cash Flow from Operations (CFO) means that Tesla has sufficient money coming in from its regular business activities, allowing for better management and growth of the company without relying on external financing.

Tesla's Cash Flow from Operations in 2023 stands at a notable $13,256,000,000, marking it as a positive figure. Historically, Tesla has had a tumultuous journey with its CFO, reflecting negative numbers consistently from 2007 to 2012. However, the trend began shifting in 2013 with a positive CFO but again showed a negative figure in 2014 and 2015. The significant breakthrough came in 2018 when Tesla's CFO turned strongly positive at $2,097,802,000. Since then, the company has maintained positive cash flows, with $13,256,000,000 in 2023 its most recent figure. This positive trend illustrates Tesla's ability to generate substantial cash from its operations, a sign of sound financial health and operational efficiency. Keeping the CFO positive five years and growing significantly is a strong indicator that the company is on stable financial footing.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures how effectively a company is using its assets to generate earnings. For Tesla (TSLA), comparing ROA of 0.1588 in 2023 to 0.1742 in 2022 helps us understand the trend in asset efficiency, essential for making informed investment decisions.

The ROA for Tesla decreased from 0.1742 in 2022 to 0.1588 in 2023, indicating a drop in asset efficiency. This decline of roughly 8.8% suggests Tesla has been less effective in utilizing its assets to generate profits this year compared to the last. Over the years, Tesla's approach in handling high operational cash outflows (-$53.5M in 2012 to $13.25B in 2023) showcases its volatile, yet generally positive trend in performance. Moreover, the industry's median ROA remains consistently higher, ranging from 0.1456 to 0.2041 between 2007 and 2023, emphasizing Tesla’s lower relative efficiency. Overall, this trend is unfavorable, assigning Tesla 0 points for this criterion.

Operating Cashflow are higher than Netincome?

The criterion evaluates if the company's operating cash flow exceeds its net income, indicating positive cash generation from core business operations.

Upon examining Tesla's financial data for 2023, the operating cash flow stands at $13.256 billion, while the net income is higher at $14.999 billion. This results in a score of 0 for this criterion. Although generating substantial cash flow, Tesla's net income is significantly higher, which might indicate earnings arising from non-core business activities or one-off events rather than merely operational efficiency. Historically, Tesla has shown considerable fluctuations in both operating cash flow and net income, especially during its transition from a startup to a mature company. For instance, Tesla's cash flow began to turn positive around 2013 and saw substantial growth, particularly in the years between 2019 and 2022, charting significant milestones in Tesla's maturity curve.

Liquidity of Tesla (TSLA)

Leverage is declining?

Leverage examines a firm's long-term debt relative to its total assets. Lower leverage typically indicates that a company is using less debt in its financing, which is often seen as a positive signal.

Leverage for Tesla has increased from 0.0457 in 2022 to 0.0612 in 2023. Over a wider timeline, comparing the leverage ratio values for the past 20 years, there has been significant fluctuation, with peaks visible in years like 2008 (1.0719) and a recent minimal leverage in 2022 (0.0457). The substantial increase from 2022 to 2023 is, however, concerning. The results indicate a rising trend in long-term debt, suggesting that TSLA is increasingly reliant on debt, potentially amplifying financial risks. Hence, in Piotroski Analysis, this results in a score of 0 for this criterion as increasing leverage is typically seen as unfavorable.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term obligations with its short-term assets. An increasing Current Ratio is preferable as it indicates a stronger liquidity position.

With Tesla's Current Ratio increasing from 1.532 in 2022 to 1.7259 in 2023, this signifies an improvement in the company's liquidity position. Tesla scores 1 point for this criterion. Historically, Tesla's Current Ratio has shown volatility, peaking at 2.7568 in 2010 and seeing lows like 0.4349 in 2007. Compared to the industry's median current ratio in 2023 of 1.262, Tesla's higher ratio indicates a better liquidity position among its peers.

Number of shares not diluted?

The change in shares outstanding can indicate a company's financing activities.

The outstanding shares for Tesla (TSLA) increased from 3,130,000,000 in 2022 to 3,173,500,000 in 2023. As the number of shares increased, we set this criterion to 0. Historically, Tesla's shares have exhibited significant variability, rising from 389.87 million in 2007 to 3.17 billion in 2023, reflecting several rounds of equity financing likely tied to the company's rapid expansion and large-scale projects. This trend may suggest ongoing dilution for shareholders, depending on the nature of the share issuances, whether for acquisitions, employee compensation, or raising capital.

Operating of Tesla (TSLA)

Cross Margin is growing?

The criterion examines the changes in gross margin between two consecutive years. A higher gross margin implies more efficient production or service costs against revenue, denoting improved profitability and operational efficiency. Sustaining or increasing this margin is crucial in assessing a company's financial health and competitiveness.

Tesla's gross margin declined from 0.256 in 2022 to 0.1825 in 2023, signifying a negative trend in the company's production efficiency or costs. This decrease means Tesla earns less per dollar of revenue, which could indicate rising costs or potential pricing adjustments. Historical data reveals significant fluctuations, with margins peaking at 0.8767 in 2007 and dipping into negative territory in 2008. Compared to the industry median of 0.1825 in 2023, Tesla aligns with broader industry performance but no longer leads as strongly as in higher-margin years. Thus, Tesla earns 0 points for this criterion.

Asset Turnover Ratio is growing?

Asset turnover measures how efficiently a company uses its assets to generate sales. It is important because a higher ratio indicates better performance and efficient utilization of assets.

Tesla's asset turnover in 2023 is 1.0243, which is a decrease from 1.1278 in 2022. This indicates that Tesla has become less efficient in using its assets to generate sales over the past year. While the overall trend over the last few years shows improvement, this decline in the most recent year is a negative indicator, setting the score for this criterion to 0.