Last update on 2024-06-04

Volkswagen (VOW3.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Discover Volkswagen's (VOW3.DE) robust financial health with an 8/9 Piotroski F-Score in 2023. Explore profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 8

We're running Volkswagen (VOW3.DE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a measure of a company's financial health, based on 9 criteria related to profitability, liquidity, and operating efficiency, with a score ranging from 0 to 9. Volkswagen (VOW3.DE) scores 8 out of 9 on this scale for 2023, reflecting its strong overall financial position. 1. Volkswagen's net income remains positive at €16.599 billion, indicating profitability (1 point). 2. Its cash flow from operations is also positive at €19.356 billion, suggesting good operational efficiency (1 point). 3. There is a small but positive increase in Return on Assets (ROA) from 2022 to 2023 (1 point). 4. Operating cash flow is higher than net income, a positive indicator of cash flow health (1 point). 5. Leverage ratio increased slightly, which is a negative sign for financial stability (0 points). 6. The current ratio has declined, though it remains above 1, suggesting some concerns about liquidity (0 points). 7. There was no change in the number of outstanding shares, indicating no recent share buybacks or dilution (0 points). 8. Gross margin has grown slightly, demonstrating improved cost control and pricing strategies (1 point). 9. Asset turnover has increased, indicating better use of assets to generate sales (1 point). Overall, the high F-Score suggests that Volkswagen has a solid profitability and operational efficiency, with minor concerns regarding leverage and liquidity.

Insights for Value Investors Seeking Stable Income

Based on the strong Piotroski F-Score of 8, Volkswagen appears to be a financially healthy and efficient company. This high score suggests that it could be worth looking into for investment, particularly if you value operational efficiency and profitability. However, potential investors should keep an eye on the company's leverage and liquidity trends, as these are the only areas where Volkswagen did not score points. Monitoring these factors will help ensure the company's strong financial position is maintained.

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

Profitability of Volkswagen (VOW3.DE)

Company has a positive net income?

Net income per Piotroski analysis represents a company's profitability. If net income is positive, it indicates the company is operating profitably, earning more revenue than it spends.

For 2023, Volkswagen's net income stands at €16.599 billion, continuing its positive trajectory from the previous years. Observing the historical data, despite setbacks such as the financial crisis in 2009 and a significant loss in 2015, Volkswagen has maintained a profitable operation over the majority of the last two decades. Thus, the current net income is positive, which is an encouraging sign for the company. Hence, this criterion is met with 1 point in Piotroski analysis. This trend exhibits financial robustness, technical expertise, and strategic management adherence within Volkswagen's operational ecosystem.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash generated by a company’s normal business operations. A positive CFO indicates healthy cash flow generation.

In 2023, Volkswagen's Cash Flow from Operations (CFO) is EUR 19.356 billion, which is indeed positive. This positive cash flow suggests that Volkswagen is effectively generating cash from its core business activities, indicating operational efficiency. Historically, Volkswagen's CFO has shown substantial fluctuations. Noteworthy is the substantial dip in 2015 where CFO was negative at EUR -1.185 billion, but it has since rebounded dramatically, hitting a peak of EUR 38.633 billion in 2021. The current positive figure aligned with historical highs signals strong management and operational health. Such a trend in CFO is favorable for the company, as it indicates sustained ability to generate cash necessary for re-investment, debt servicing, and dividend payments.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) measures the improvement in a company's profitability and efficiency in using assets year-over-year. An increasing ROA signifies a more efficient management.

The ROA for Volkswagen (VOW3.DE) increased from 0.0283 in 2022 to 0.0285 in 2023, marking an improvement. According to the Piotroski F-Score model, this increase sets the criterion to 1 point, indicating a positive trend. Historically, from 2003 to 2023, Volkswagen has showcased fluctuations in operating cash flows, signifying varied efficiency in years. Despite the slight improvement in 2023, Volkswagen's ROA is substantially lower than the last 20 years of the industry median, which peaked at 0.218 in 2003. The consistent gap signals that while Volkswagen made an improvement this year, it continues to lag behind its industry peers in terms of asset efficiency.

Operating Cashflow are higher than Netincome?

The criterion assesses if Volkswagen's operating cash flow exceeds its net income, indicating stronger cash-generating efficiency.

Indeed, Volkswagen's operating cash flow for 2023 stands at €19.356 billion, surpassing its net income of €16.599 billion. This difference indicates that the company has more cash earnings than accounting profits, which is a positive trend. Over the past 20 years, Volkswagen's cash flow from operations has also shown considerable growth, peaking at €38.633 billion in 2021 while maintaining strong figures even during challenging economic periods such as 2008. This consistent cash-flow superiority underscores the firm's robust operational efficiency and financial health. Therefore, Volkswagen earns 1 point in this criterion.

Liquidity of Volkswagen (VOW3.DE)

Leverage is declining?

Change in leverage refers to the alterations in a company's debt level relative to its equity. It's a crucial metric as it indicates financial risk and stability.

Volkswagen's leverage ratio increased from 0.1984 in 2022 to 0.2112 in 2023, signifying a rise in debt relative to equity. This increase in leverage is generally seen as negative for financial stability, implying higher risk. Historically, Volkswagen's leverage has fluctuated, with significant increases during times of financial stress. The last 20 years' data shows a peak leverage in 2004 at 0.3433 and a significant decrease in subsequent years. The recent increase, however, does not earn a point per the Piotroski criteria, making it crucial for investors to monitor future leverage trends.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with short-term assets. It is critical.

Volkswagen's Current Ratio decreased from 1.2268 in 2022 to 1.164 in 2023, indicating a decline in liquidity. While it remains above 1, the trend is concerning since, over the last 20 years, the current ratio averaged higher. Comparatively, the industry median for 2023 is 1.262. Volkswagen's dip below the industry median suggests they might face more difficulty meeting short-term liabilities compared to peers. Hence, 0 points are allocated for this criterion.

Number of shares not diluted?

The first criterion in the Piotroski Analysis is to evaluate whether a company's number of outstanding shares has decreased compared to the previous year. A reduction in outstanding shares often indicates share buybacks, which can be a sign that the company believes its stock is undervalued and can increase shareholder value.

Volkswagen's outstanding shares in 2022 were 501,295,263, and this figure remained constant in 2023 at 501,295,263. Over the past 20 years, the number of outstanding shares has seen various increases, with no recent decrease indicated. This implies Volkswagen has not repurchased shares in the latest fiscal year, resulting in 0 points being added in this specific criterion. It is neither negative nor positive, but does reflect a lack of active measures to reduce share count.

Operating of Volkswagen (VOW3.DE)

Cross Margin is growing?

Compare the Gross Margin for Volkswagen (VOW3.DE) year-over-year from 2022 to 2023, and its relevance in financial health assessment.

The Gross Margin for Volkswagen (VOW3.DE) increased from 0.187 in 2022 to 0.1893 in 2023. This improvement, albeit slight, suggests enhanced cost control and pricing strategies. Over the past 20 years, Volkswagen's gross margin trend has generally been positive, peaking at 0.1965 in 2018. For 2023, Volkswagen's gross margin outdoes the industry's median of 0.1825, indicating the automaker's relative strength in managing production and operational efficiencies compared to its peers. Therefore, for the given year-over-year improvement, this criterion scores 1 point.

Asset Turnover Ratio is growing?

Asset turnover measures how efficiently a company uses its assets to generate sales. An increase in asset turnover indicates improved operational efficiency.

Volkswagen's asset turnover improved from 0.5108 in 2022 to 0.5536 in 2023. This increase by 8.37% points toward a positive trend in the company's operational efficiency. Historically, Volkswagen's asset turnover ratio has seen various fluctuations, peaking at 0.7755 in 2003 but experiencing a general decline until 2016. The trend started to reverse post-2020, with the latest improvement adding 1 point to Volkswagen's Piotroski Score.