Last update on 2024-06-07

Secunet Security Networks (YSN.DE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Secunet Security Networks (YSN.DE) using Piotroski F-Score for 2023. Final score: 6/9 - evaluates profitability, liquidity, efficiency, and leverage.

Short Analysis - Piotroski Score: 6

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

The Piotroski F-Score evaluates a company's financial strength using 9 criteria: profitability, liquidity, and operational efficiency, scoring between 0 to 9. Higher scores indicate stronger financial positions. Secunet Security Networks (YSN.DE) has a Piotroski F-Score of 6 out of 9. Key highlights include consistent positive net income and cash flow, declining leverage, and non-diluted shares. However, the company struggles with a declining return on assets and gross margin, and a slightly decreasing current ratio, suggesting some aspects of inefficiency and liquidity concerns.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 6, Secunet Security Networks demonstrates generally sound financial health with strengths in profitability and cash flow from operations. The consistent net income and the efficiency in generating cash support its robustness, while the decreased leverage is another positive sign. However, potential investors should be cautious of the declining return on assets and gross margin, along with the slightly falling current ratio. These concerns necessitate a deeper investigation, though the stock remains worth considering for its strengths.

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

Profitability of Secunet Security Networks (YSN.DE)

Company has a positive net income?

Net income indicates the company's profitability. Positive net income means the company is profitable, signaling financial health.

Secunet Security Networks (YSN.DE) reported a positive net income of €29,150,004.3 in 2023. This is beneficial, reflecting ongoing profitability. Notably, the firm has consistently recorded positive net income over the past 20 years, with significant growth in recent years as seen in 2022 (€31,308,526.86) and 2021 (€43,097,334.71). Given this consistent profitability, Secunet scores a point for this criterion under the Piotroski analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash a company generates from its regular operational activities, excluding any costs associated with long-term investments or capital expenditures.

The CFO for Secunet Security Networks in 2023 stands at €51,875,876.66. Notably, this is a positive figure, which is a strong sign of financial health for a company, as it shows that the company is generating more cash than it is expending in its core business operations. Analyzing the historical data over the last 20 years, the company has shown substantial growth in its CFO. The trend primarily reveals increasing CFO values with occasional negative dips in 2006, 2009, and 2022. Nevertheless, the positive trend and the substantial CFO values in recent years signify robust operational performance. As the CFO is positive in 2023, we can add 1 point for this criterion in the Piotroski Analysis.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) from the previous year is a vital indicator of a company's efficiency in utilizing its assets to generate profit. An increasing ROA suggests improving profitability and operational efficiency, which is crucial for stakeholders.

The ROA for Secunet Security Networks (YSN.DE) decreased from 0.1062 in 2022 to 0.0905 in 2023. This downward trend results in no points being added for this criterion, as a declining ROA indicates reduced efficiency in asset utilization. Over the last two decades, their ROA has shown significant fluctuations, though it never quite aligned with the industry's median, which consistently remained above 0.28. The current ROA of 0.0905 remains well below the industry median of 0.3391 for 2023, reinforcing concerns about the company's efficiency and profitability compared to its peers.

Operating Cashflow are higher than Netincome?

Explain the criterion for Secunet Security Networks (YSN.DE) and why it is important to consider

Operating cash flow (OCF) provides insights into a company's ability to generate cash from its core business operations. OCF being higher than net income indicates that the company is efficient in converting its revenue into cash, reducing the risk of earnings manipulation. For Secunet Security Networks (YSN.DE) in 2023, the OCF is EUR 51,875,876.66 while the net income is EUR 29,150,004.3. This positive disparity of over EUR 22 million signifies strong operational efficiency and reliability of reported earnings. Historical data trends, such as some negative OCF years (e.g., 2006, 2022), highlight cyclical or non-recurring issues, but the long-term upward trajectory from EUR 1,552,195 in 2003 to present levels illustrates durable growth. Thus, this trend is favorable for YSN.DE.

Liquidity of Secunet Security Networks (YSN.DE)

Leverage is declining?

Leverage reflects the extent to which a company is financing its operations through debt. Lower leverage indicates lower financial risk.

Secunet Security Networks (YSN.DE) has seen a decrease in its leverage from 0.0471 in 2022 to 0.0392 in 2023. This trend indicates a positive direction as the company is reducing its reliance on debt, hence lowering its financial risk. Accumulating data from the past 20 years, the company's leverage levels have been impressive starting from 0 in 2003 to reducing consistently in recent years. Given the decrease in leverage, this results in an increase of 1 point under the Piotroski F-Score.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets. It is a key indicator of financial health and efficiency.

Comparing the Current Ratios for Secunet Security Networks (YSN.DE), it slightly decreased from 1.7397 in 2022 to 1.7059 in 2023. Despite the slight decrease, the company's Current Ratio remains higher than the industry median of 1.4169 in 2023. Overall, this indicates good short-term liquidity, although the drop is a negative signal. Considering the Current Ratio did not increase in 2023, this criterion scores 0 points according to the Piotroski Analysis.

Number of shares not diluted?

Outstanding Shares is a critical factor as it directly impacts shareholder value. If a company reduces its shares outstanding, it may indicate stock repurchases which can be a sign of confidence from the management in the company's future prospects. Conversely, an increase in shares outstanding could signify dilution which might have negative implications for current shareholders.

With 6,469,502 outstanding shares in 2022 and a significant reduction to 0 shares in 2023, Secunet Security Networks has seen an extreme decrease. Historically, from 2003 to 2022, the outstanding shares remained relatively stable with minor adjustments in a range close to 6.5 million. The drastic reduction to 0 shares in 2023 is profound and could indicate a major corporate restructuring, merger, or acquisition resulting in privatization or significant share buybacks. Since outstanding shares decreased, Secunet scores 1 point for this Piotroski criterion. However, the context behind the reduction needs thorough investigation to grasp the full impact.

Operating of Secunet Security Networks (YSN.DE)

Cross Margin is growing?

Gross Margin measures the percentage of revenue that exceeds the cost of goods sold. It is crucial as it indicates the financial health and operational efficiency of the company in generating profit.

The Gross Margin for Secunet Security Networks in 2023 was 0.2219, compared to 0.2596 in 2022. This represents a decrease in Gross Margin from 25.96% in 2022 to 22.19% in 2023. Therefore, for this criterion, the score remains 0 points. This trend is negative, indicating a reduction in the operational efficiency and profit generation capacity of the firm. Moreover, looking at the historical data, it is observed that in the early years, the Gross Margin was substantially higher but experienced a notable decline around 2011 and has remained under pressure since. Comparatively, the 20-year average industry median Gross Margin trend shows relatively higher, consistent figures, further highlighting Secunet Security Networks' underperformance in this regard.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company in using its assets to generate sales. A higher ratio indicates greater efficiency.

The Asset Turnover has increased from 1.1781 in 2022 to 1.2225 in 2023. This increment of approximately 3.77% (1.2225/1.1781 - 1) suggests that Secunet Security Networks has become more efficient in utilizing its assets to generate revenue in 2023 compared to 2022. In the broader context of the last 20 years, the Asset Turnover fluctuated significantly, hitting a peak of 1.5552 in 2005 and a low of 0 in some years, indicating periods of varying efficiency. Nonetheless, this recent improvement is a positive sign, earning Secunet 1 point in the Piotroski analysis.