Last update on 2024-06-06

Vulcan Materials (VMC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Explore Vulcan Materials' financial performance through the lens of Piotroski F-Score for 2023, achieving a perfect 9/9 score indicating strong financial health.

Short Analysis - Piotroski Score: 9

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

The Piotroski F-Score for Vulcan Materials (VMC) is a perfect 9, indicating the company's strong financial position. The analysis explores the profit, operating efficiency, and liquidity of Vulcan Materials, showing positive trends in net income, cash flow from operations, return on assets, and current ratio. Additionally, the company’s leverage has decreased, and operating cash flow has consistently surpassed net income, indicating good earnings quality. Despite being lower in some ratios compared to the industry median, VMC's scores demonstrate robust financial health over the examined periods, suggesting it is a strong performer in these areas.

Insights for Value Investors Seeking Stable Income

Based on the high Piotroski F-Score of 9, Vulcan Materials (VMC) appears to be a solid investment opportunity. The company shows strong financial health and operational efficiency, with positive indicators across multiple criteria. However, investors should conduct comprehensive research beyond this analysis and consider market conditions, alternative investments, and individual financial goals before making investment decisions.

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

Profitability of Vulcan Materials (VMC)

Company has a positive net income?

Net income is a crucial measure of a company's profitability. Consistent positive values indicate strong financial health.

For the fiscal year 2023, Vulcan Materials (VMC) reported a net income of $933.2 million, which is positive. This improvement extends a positive trend observed over multiple fiscal years. The historical net income figures reveal a strong recovery from the mid-2000s, where the company experienced negative net income on several occasions. The net income peaked in 2023, further highlighting financial robustness. This positive showcasing grants VMC a full point for this criterion, reflecting robust profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) signifies the amount of cash a company generates from its regular business operations. It is a key indicator to assess the financial health and operational efficiency of a business, vying for positive growth.

The CFO for Vulcan Materials (VMC) in 2023 stands at $1,536,800,000, which is positive. Over the past 20 years, the company has demonstrated substantial growth in its operating cash flow, which started from $519,046,000 in 2003. The trend continues to show a marked improvement, particularly when examined from 2020 onwards, from $1,070,400,000 in 2020 to $1,148,200,000 in 2021, soaring steadily to reach the recent high in 2023. This persistent positive CFO, peaking notably in recent years, clearly exemplifies VMC's increasingly efficient and lucrative business operations. Hence, the criteria score is 1, indicating robust financial health.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures a company's efficiency in generating earnings from its assets. An increasing ROA signals improved profitability and efficient asset use.

Vulcan Materials (VMC) reported a return on assets (ROA) of 0.0648 in 2023, compared to 0.0412 in 2022. This improvement in ROA from 4.12% to 6.48% indicates a significant enhancement in the company's ability to generate profit from its assets. This positive trend, marked by an increase of 2.36 percentage points, adds 1 point to the Piotroski score. However, it's worth noting that over the past 20 years, the industry median ROA was significantly higher, with an average value fluctuating around 32.14%. This comparison suggests that while VMC has shown remarkable recent improvement, its ROA still lags behind industry peers.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income criterion examines whether a company's operating cash flow exceeds its net income.

For Vulcan Materials (VMC) in 2023, the Operating Cash Flow (OCF) was $1,536,800,000 while the Net Income stood at $933,200,000. This fulfills the criterion, making it +1 point in the Piotroski F-score. This is a good indicator as it suggests that the company is generating strong cash flow relative to its net income, which may signify good earnings quality and cash-backed earnings. Historical data also reveal that the OCF has been consistently above Net Income over the last 20 years. For instance, in 2019 the OCF was $1,051,900,000 compared to a net income of $617,662,000, and in 2020 OCF was $1,070,400,000 against a net income of $584,500,000. These numbers collectively strengthen the argument that Vulcan Materials has a robust operational cash-generating capability, a positive sign for investors.

Liquidity of Vulcan Materials (VMC)

Leverage is declining?

Change in Leverage involves comparing the company's current leverage ratio with the previous year's ratio to assess its financial risk trend.

For Vulcan Materials (VMC), the leverage ratio has slightly decreased from 0.3108 in 2022 to 0.3014 in 2023. This indicates a reduction in leverage, suggesting that the company has either reduced its debt levels or increased its equity base. Lower leverage typically signifies a stronger financial position as it implies less risk from debt obligations. Notably, examining the 20-year leverage data shows fluctuations, with the highest leverage at 0.3301 in 2021 and the lowest at 0.0901 in 2005. Although the company's leverage has seen considerable variations over the past two decades, the recent decrease to 0.3014 is particularly critical for investors seeking financial stability. Therefore, VMC earns a point for this criterion as the leverage has decreased, signaling a positive trend in financial management.

Current Ratio is growing?

The Current Ratio evaluates a company's ability to pay off its short-term liabilities with its short-term assets.

Vulcan Materials' Current Ratio increased from 1.9883 in 2022 to 3.1656 in 2023, indicating improved liquidity. A higher Current Ratio suggests better short-term financial health and a greater ability to cover short-term liabilities without needing additional financing. Historically, VMC's Current Ratio varied significantly, dropping as low as 0.4577 in 2007 during recessionary times and reaching heights of 3.3232 in 2004. The industry median has remained below VMC's 2023 level, reflecting Vulcan's above-average liquidity among its peers. Given this positive trajectory, VMC deserves a 1-point increment in Piotroski scoring for this criterion.

Number of shares not diluted?

Change in shares outstanding compares the current outstanding shares to the prior period's data. It is important because it impacts shareholders' equity and EPS.

Comparing the outstanding shares of 133,000,000 in 2022 with 133,000,000 in 2023 shows a constant share count. Historically, shares have increased gradually from 102,710,000 in 2003 to the current level. No change in shares (2022-2023) implies a neutral impact, scoring 0 on Piotroski’s scale as expansion was halted.

Operating of Vulcan Materials (VMC)

Cross Margin is growing?

Change in Gross Margin for Vulcan Materials (VMC) compares the Gross Margin year over year to determine whether there is an improvement in operational efficiency, signifying potentially higher profitability.

The Gross Margin for Vulcan Materials (VMC) in 2023 stands at 0.2504, up from 0.2129 in 2022. This represents an increase, hence adding 1 point. This trend is indicative of improved cost management or pricing strategies that positively impact profit margins. Notably, the Gross Margin had been around 0.2474 in 2021, suggesting a recovery from 2022. However, when juxtaposed with the industry median of 0.3214 in 2023, VMC still lags behind. Historically, VMC’s Gross Margin has fluctuated significantly over the last two decades but has shown gradual improvement since the 2010s, peaking around 0.2788 in 2006.

Asset Turnover Ratio is growing?

The criterion examines the change in Asset Turnover, measuring how efficiently a company uses its assets to generate sales.

The Asset Turnover for Vulcan Materials increased from 0.5241 in 2022 to 0.5408 in 2023, indicating a positive trend. This suggests that Vulcan Materials has become slightly more efficient in using its assets to generate revenue. Historically, the Asset Turnover ratio has varied, reaching a peak in 2006 at 0.9532 and a low in 2009 at 0.3084. The current ratio of 0.5408, while not at historical highs, represents a significant improvement over previous years, particularly from the low points seen in 2008 and 2009. As the criterion dictates an increase, this will award 1 point to Vulcan Materials.