Last update on 2024-06-07

Ultralife (ULBI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Ultralife (ULBI) with a Piotroski F-Score of 6/9 in 2023. Discover profitability, liquidity, and operating metrics.

Short Analysis - Piotroski Score: 6

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

Ultralife Corporation (ULBI) received a Piotroski F-Score of 6 out of 9. The analysis evaluates the company's profitability, liquidity, and operating efficiency based on nine criteria. For profitability, ULBI displayed positive net income and cash flow from operations in 2023, which is promising. Its Return on Assets (ROA) also improved compared to the previous year. However, the operating cash flow was less than the net income, which suggests potential unsustainable earnings and scores 0 points. In terms of liquidity, ULBI showcased a growing current ratio indicating improved ability to meet short-term obligations. On the downside, the leverage ratio increased, indicating higher financial risk, and there was a slight increase in shares outstanding, indicating dilution. For operating efficiency, ULBI demonstrated positive developments with an improving gross margin and asset turnover ratio in 2023.

Insights for Value Investors Seeking Stable Income

A Piotroski F-Score of 6 suggests that Ultralife Corporation (ULBI) has moderately strong financial health but with areas of concern. As an investor, you might consider looking into the stock but should proceed with caution. The positive indicators in profitability and liquidity are encouraging, but the company's increasing leverage and share dilution warrant careful consideration. Observing how the company's financial health evolves in the next few quarters and comparing it with industry peers could provide a better investment perspective.

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

Profitability of Ultralife (ULBI)

Company has a positive net income?

Net income assesses a company's profitability over a specific period.

The net income of Ultralife (ULBI) in 2023 is $7,197,000, which is positive, adding 1 point to the Piotroski F-Score. Over the last 20 years, Ultralife has experienced fluctuating net incomes, ranging from significant losses like -$27,488,000 in 2006 to impressive gains like $24,930,000 in 2018. The positive net income in 2023 suggests a rebound and stability in the company's profitability. Such performance can instill confidence in investors by indicating a return to profitability after some lean years.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion examines whether a company's operating cash flow is positive. This indicates that the company is generating more cash than it is using in its core business.

For Ultralife (ULBI) in 2023, the CFO stands at 1,929,000, which is positive. Therefore, this criterion scores 1 point. Observing the company's operating cash flows over the last 20 years reveals intermittent fluctuations between negative and positive values. There have been instances of strong positive cash flows such as in 2004 and 2020, with values of $10,875,000 and $21,720,000, respectively, as well as periods of strained cash flows in 2003 and 2019, showing values of -$4,567,000 and -$2,970,000, respectively. Thus, while 2023's positive CFO is a good sign, potential investors should be aware of the company's historical volatility in generating operating cash flows.

Return on Assets (ROA) are growing?

Evaluating the change in Return on Assets (ROA) is critical as it gauges a company's ability to manage its assets efficiently to generate profits. A rising ROA indicates improving profitability and asset utilization.

Ultralife's ROA has significantly improved from -0.0007 in 2022 to 0.0415 in 2023. This rise in ROA is a positive sign, indicating that the company is utilizing its assets more efficiently to generate profits. Compared to the industry median ROA, which was 0.2995 in 2023, it shows that while Ultralife is improving, it still lags behind the industry average. Over the last 20 years, Ultralife’s ROA has been inconsistent, often showing periods of negative returns, particularly during economic downturns.

Operating Cashflow are higher than Netincome?

Compare Operating Cash Flow to Net Income for Ultralife (ULBI). A higher Operating Cash Flow than Net Income indicates good earnings quality and financial health.

In 2023, the Operating Cash Flow for Ultralife (ULBI) was $1,929,000, while the Net Income was significantly higher at $7,197,000. This discrepancy indicates that the company is earning less cash from its operations relative to its net income, which could signal potential earnings management issues or non-sustainable revenue recognition. Therefore, we award Ultralife (ULBI) 0 points in this criterion. Historically, comparison shows a fluctuating trend, where typically Operating Cash Flow lagged behind Net Income outside of select strong operating years like 2008 and 2020 when Operating Cash Flow surged to $19,058,000 and $21,720,000, respectively.

Liquidity of Ultralife (ULBI)

Leverage is declining?

Change in Leverage involves comparing the leverage ratios over two periods. A decrease in leverage signals improved financial health.

In comparing the leverage ratio of Ultralife (ULBI) from 2022 (0.1146) to 2023 (0.1325), it is evident that leverage has increased. This shift denotes that the company is employing more debt relative to its equity, hence increasing its financial risk. Historically, Ultralife has had a fluctuating leverage ratio, ranging from near zero to significant spikes (e.g., 0.205 in 2006). However, the present uptick suggests a potential strategy change or need for increased borrowing, which warrants cautious optimism or concern. Thus, for the Piotroski analysis, this criterion scores 0 points indicating a negative trend.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over the next 12 months. It is calculated as Current Assets divided by Current Liabilities. A higher Current Ratio indicates a stronger liquidity position, implying that the company can cover its short-term liabilities more comfortably.

For Ultralife (ULBI), the Current Ratio has increased from 2.7319 in 2022 to 3.8012 in 2023, adding 1 point to the score. This demonstrates an improvement in the company's liquidity position. Historically, Ultralife's Current Ratio has shown a significant upward trajectory, with peaks as high as 5.0709 in 2014 and lows around 1.4779 in 2006. The increase in 2023 indicates a healthier liquidity standing, especially when compared to the industry median which stands at 2.2293 in 2023. This above-average ratio affirms Ultralife's enhanced capacity to meet its short-term obligations relative to industry peers. Therefore, for the criterion of Change in Current Ratio, the trend is positive.

Number of shares not diluted?

Shares Outstanding refers to the total number of shares currently owned by investors. It is crucial as it represents ownership and helps calculate key metrics like EPS, affecting stock price.

For Ultralife (ULBI), the Outstanding Shares have risen from 16,125,000 in 2022 to 16,214,000 in 2023. This indicates an increase in shares, hence no point is awarded. Over the last 20 years, shares have followed a somewhat erratic pattern—from 13,917,000 in 2003 rising to a peak of 17,705,000 in 2008, then fluctuating and eventually arriving at 16,214,000 in 2023. The recent rise could imply dilution, impacting shareholder value negatively.

Operating of Ultralife (ULBI)

Cross Margin is growing?

Gross Margin measures the percentage of revenue that exceeds the cost of goods sold (COGS), reflecting the core profitability of a company's operations.

Ultralife's (ULBI) Gross Margin has increased from 0.223 in 2022 to 0.2471 in 2023. This increase in Gross Margin from 22.3% to 24.71%, represents an improvement in the company's ability to manage its production costs efficiently relative to its revenue. The additional historical data shows that the Gross Margin has been variable, peaking at 30.67% in 2017 and hitting a low of 17.39% in 2005. Compared to the industry's median Gross Margin, which has fluctuated but currently stands at 29.95% in 2023, ULBI is below industry standards. Given this improvement in Gross Margin in 2023, ULBI scores 1 point for this criterion, indicating a positive trend in profitability.

Asset Turnover Ratio is growing?

Asset Turnover evaluates a company's efficiency in using its assets to generate sales. A higher ratio indicates better performance.

In 2022, Ultralife (ULBI) reported an Asset Turnover of 0.804, which increased to 0.9152 in 2023. This uptick signifies an enhancement in the company's ability to utilize its assets to generate revenue. Historically, the company's Asset Turnover has experienced fluctuations, peaking at 2.0244 in 2008 and hitting a low of 0.6612 in 2021. The increase from 0.804 in 2022 to 0.9152 in 2023 demonstrates a positive development. Therefore, one point should be added for this criterion.