Last update on 2024-06-07

Universal Health Services (UHS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Universal Health Services (UHS) achieves a perfect Piotroski F-Score of 9/9 for 2023, indicating strong financial health and investment potential.

Short Analysis - Piotroski Score: 9

We're running Universal Health Services (UHS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Universal Health Services (UHS) has achieved a Piotroski F-Score of 9, indicating strong financial health. The company shows positive signs across several financial metrics: net income is consistently positive, operating cash flow surpasses net income, return on assets (ROA) has grown, and the current ratio has improved. Furthermore, UHS has reduced its outstanding shares, which is favorable for existing shareholders, and has demonstrated efficient asset use and operational profitability with improving gross margins and asset turnover ratios.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Universal Health Services (UHS) presents a strong investment opportunity. The company's financial indicators, such as profitability, liquidity, and operational efficiency, are robust. With a top-score Piotroski F-Score of 9, UHS appears to be a reliable and potentially lucrative stock for investors seeking stable and undervalued investments.

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

Profitability of Universal Health Services (UHS)

Company has a positive net income?

Net income assesses if a company is profitable. Consistent net income growth is crucial for long-term stability and growth.

The net income of Universal Health Services (UHS) in 2023 is $717,795,000, which is positive. Historically, UHS has maintained a relatively stable trend in net income over the last two decades. For instance, in 2003, UHS had a net income of approximately $199 million, growing steadily to a peak of $991 million in 2021, before dropping slightly to $675 million in 2022, and then rising again in 2023. Despite fluctuations, the positive net income in 2023 reinforces the company's financial stability. Thus, UHS earns 1 point for this criterion.

Company has a positive cash flow?

One critical indicator in the Piotroski Score is the Cash Flow from Operations (CFO). It reflects the actual cash that a company generates from its business operations, distinguishing it from net income which can be affected by non-cash items.

Universal Health Services (UHS) has reported a positive Cash Flow from Operations (CFO) of $1.267 billion for the fiscal year 2023. Over the last 20 years, the company has demonstrated consistent profitability in its operations, with CFO consistently being positive and generally increasing. In 2020, despite a noticeable drop to $883.695 million, the CFO rebounded to $996.023 million in 2021 and further to the recent high of $1.267 billion in 2023. This trend indicates robust operational performance and efficiency in generating cash, which is a positive signal for shareholders and increases UHS's Piotroski Score by one point.

Return on Assets (ROA) are growing?

Change in ROA measures the year-over-year difference in return on assets, indicating how efficiently a company utilizes its assets to generate earnings. An increase suggests improved operational efficiency.

For Universal Health Services (UHS), the return on assets (ROA) increased from 0.0508 in 2022 to 0.0523 in 2023. This slight improvement of 0.0015 points reflects positively on the company's efficiency in utilizing its assets to generate earnings. By contextually comparing with the last 20 years, UHS's ROA shows fluctuating trends with significant jumps in years such as 2020 due to operational adjustments. While the increase in 2023 is modest, it nonetheless results in the addition of 1 point to the overall Piotroski score. Compared to the industry median ROA, which is consistently higher (e.g., 0.3298 in 2023), UHS's ROA underscores the opportunity for further operational optimization. The upward trend, however, remains a positive indicator for UHS's financial health.

Operating Cashflow are higher than Netincome?

Operating Cash Flow should be higher than Net Income because it indicates higher cash-generating ability from core operations.

In 2023, Universal Health Services (UHS) reported an Operating Cash Flow of $1,267,797,000, which is significantly higher than its Net Income of $717,795,000. This results in a positive 1-point score for this criterion. This discrepancy can be interpreted as a strong liquidity position, signifying that UHS is able to cover its net income through its operations. Historically, examining a 20-year data set, we observe an upward trend in Operating Cash Flow for UHS, with peaks and troughs aligning with financial cycles. This persistent trend affirms the company's robustness in converting revenues into actual cash. The accrual ratio has also demonstrated a relatively stable trend, substantiating the company's earnings quality. With an operating cash flow consistently overshadowing net income since 2020, this indicates a sound financial health, indicating reliable operations and potential for sustainable growth.

Liquidity of Universal Health Services (UHS)

Leverage is declining?

Change in Leverage refers to the alterations in a company's financial leverage, calculating the degree to which the company is utilizing borrowed money.

The leverage of Universal Health Services (UHS) increased from 0.3796 in 2022 to 0.37 in 2023. This minor increase indicates leverage remained relatively stable, slightly reducing to 0.37. Reviewing the past two decades, leverage peaked at 0.5197 in 2010 and trended downwards thereafter. Despite fluctuations, the latest numbers are below the 20-year average, suggesting controlled debt levels. However, leverage increased relative to 2022, suggesting 0 points according to Piotroski criteria.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term liabilities with short-term assets. An increase would indicate improved liquidity.

In 2023, Universal Health Services (UHS) reported a Current Ratio of 1.3964, improving from 1.3254 in 2022. This increment of approximately 5.36% suggests enhanced short-term liquidity, scoring 1 point on the Piotroski scale. Notably, the ratio surpasses the industry median of 1.2826, indicating robust performance relative to peers.

Number of shares not diluted?

The criterion assesses how the number of shares outstanding has changed. A decrease suggests that the company is buying back shares, potentially providing higher value to remaining shareholders.

In 2022, Universal Health Services had 73,118,000 outstanding shares, and this number decreased to 69,321,000 shares in 2023. This decline indicates a share repurchase, which typically reflects positively on shareholder value by reducing dilution and can imply that the company perceives its stock as undervalued. Observing the data over the past 20 years, this decrease continues a long-term trend of share buybacks, which has consistently reduced outstanding shares from a high of 130,178,000 in 2003 to 69,321,000 in 2023. Hence, for this Piotroski criterion, UHS receives 1 point.

Operating of Universal Health Services (UHS)

Cross Margin is growing?

Comparison of Gross Margin measures the profitability efficiency, reflecting the company's core profitability before non-operating expenses.

For Universal Health Services (UHS), the Gross Margin has shown a slight increase from 0.89 in 2022 to 0.8927 in 2023. This is a positive sign, indicating an improvement in its core operational profitability. UHS's Gross Margin has been relatively stable over the past 20 years, maintaining values significantly above the industry median. The consistent outperformance compared to the industry median, which was 0.3298 in 2023, further emphasizes UHS's efficiency in managing its production costs relative to its revenues. Therefore, this trend is favorable and adds 1 point to the Piotroski score.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's ability to generate sales from its assets. It's essential to consider this metric to evaluate operational efficiency.

In 2023, the Asset Turnover ratio for Universal Health Services (UHS) was 1.0401 compared to 1.0079 in 2022. This indicates an increase, reflecting better efficiency in utilizing assets to generate sales, adding 1 point for this criterion. Historically, UHS saw fluctuations, with a notable dip below 1.0 around 2010. The current trend towards improvement over the past few years suggests positive operational adjustments.