Last update on 2024-06-06

Zebra Technologies (ZBRA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Zebra Technologies (ZBRA) Piotroski F-Score Analysis 2023: 4/9. Discover insights on profitability, liquidity, leverage, and operational efficiency.

Short Analysis - Piotroski Score: 4

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

The Piotroski F-Score is a rating system that gauges a company's financial strength between 0 to 9 based on profitability, liquidity, and operational efficiency. In a recent analysis, Zebra Technologies (ZBRA) received a Piotroski score of 4 out of 9, suggesting that while the company has some strengths, there are notable weaknesses as well.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski analysis, Zebra Technologies presents a mixed bag for potential investors. The company shows positive net income, a growing current ratio, and a declining number of shares, which are all good signs. However, several concerning factors like negative cash flow from operations, decreased ROA, increased leverage, and reduced asset turnover raise red flags. Investors may want to cautiously monitor the company's financial health and perhaps look for more stable opportunities with higher scores before making any 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 Zebra Technologies (ZBRA)

Company has a positive net income?

Net income is a crucial profitability measure indicating a company's earnings after all expenses have been deducted from revenues.

The net income for Zebra Technologies in 2023 is $296 million, which is positive and contributes 1 point in the Piotroski score. Over the past 20 years, Zebra Technologies has generally shown a fluctuating trend in net income, with periods of losses, particularly in 2008 and 2014-2015 where net income was negative. However, since 2016, the company has maintained a largely positive net income. The positive net income in 2023 suggests effective cost management and revenue growth, although it is lower compared to $463 million in 2022, indicating a downward trend that could be indicative of certain challenges or investments eating into profits. Nevertheless, this still adds a favorable signal to the Piotroski score.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion checks if a company generates positive cash flow from its core business operations. It's crucial for evaluating operational efficiency and sustainability.

In 2023, Zebra Technologies (ZBRA) reported a Cash Flow from Operations (CFO) of -$4,000,000. This is a stark deviation from historical performance, particularly considering that the company reported positive CFO in the past 20 years, with figures reaching as high as $1,069,000,000 in 2021. The negative CFO is alarming and earns a score of 0 in the Piotroski F-Score model. This trend indicates operational challenges and raises concerns about the company's operational efficiency and cash flow sustainability.

Return on Assets (ROA) are growing?

ROA measures how efficiently a company generates profit from its assets. A higher ROA indicates higher asset profitability.

In 2022, Zebra Technologies (ZBRA) had a Return on Assets (ROA) of 0.0674, which decreased to 0.0399 in 2023. This decline is concerning as it suggests that the company became less efficient in generating profit from its assets compared to the previous year. The 2023 ROA is significantly below the industry median of 0.3903, implying that ZBRA is underperforming relative to its peers in efficiently utilizing its assets to generate returns.

Operating Cashflow are higher than Netincome?

Operating cash flow (OCF) higher than net income is an indicator of high-quality earnings as it signifies that a company’s profits are supported by actual cash flow rather than accounting adjustments.

For the financial year 2023, Zebra Technologies (ZBRA) reported an operating cash flow (OCF) of -$4,000,000 while net income stood at $296,000,000. This divergence—where OCF is considerably lower and even negative compared to net income—is a concerning sign pointing to potential issues in cash generation. This mismatch implies that the company's earnings may not be as high-quality as one might hope. Historically, Zebra Technologies had consistently positive operating cash flows, reaching a peak of $1,069,000,000 in 2021. However, the sharp decline over the past couple of years warrants closer scrutiny. Furthermore, accruals, which gauge the portion of earnings not realized in cash, depict a slightly downward trend over the long term but notably turn negative in 2023 (-0.0005). Given this wider context, awarding 0 points here accurately reflects the weakened cash flow position of the company.

Liquidity of Zebra Technologies (ZBRA)

Leverage is declining?

Change in leverage is a critical parameter in evaluating a company's financial health, particularly its solvency and risk of being overleveraged.

Zebra Technologies' leverage increased from 0.2587 in 2022 to 0.301 in 2023. This indicates that the company has taken on more debt relative to its equity, which can be concerning if the debt level becomes unsustainable. Given that the historical leverage data indicates generally low levels of leverage, with a notable spike since 2014, this recent increase may warrant closer scrutiny in the context of the company's overall financial strategy.

Current Ratio is growing?

The current ratio compares a company's current assets to its current liabilities, reflecting short-term financial health.

For the year 2023, Zebra Technologies (ZBRA) has a current ratio of 1.0463, compared to a current ratio of 0.8075 in 2022. This represents an increase, which implies an improvement in short-term liquidity and financial health, adding 1 point in Piotroski Analysis. Historically, ZBRA's current ratio shows a clear reduction from its high levels in the early 2000s but has recently started to bounce back. However, its ratio is still below the industry median (2023: 1.8276), indicating relatively weaker liquidity compared to peers. Therefore, while there is positive progress, prolonged trends need monitoring.

Number of shares not diluted?

Change in shares outstanding indicates whether a company has been diluting its shares, which can impact shareholder value.

In 2023, Zebra Technologies (ZBRA) had Outstanding Shares of 51,378,051 compared to 52,207,903 in 2022, signaling a decrease. Historically, Zebra Technologies has shown a mixed trend in outstanding shares, but the decline from 2022 to 2023 is a positive trend. Lower outstanding shares often suggest share buybacks, which can increase earnings per share (EPS) and potentially boost the stock price. Thus, this trend receives 1 point under the Piotroski criteria.

Operating of Zebra Technologies (ZBRA)

Cross Margin is growing?

Compare the Gross Margin of Zebra Technologies (ZBRA) in two consecutive years to assess the directional trend, which plays a vital role in Piotroski analysis. Gross Margin indicates the percentage of revenue exceeding the cost of goods sold (COGS), reflecting the core profitability and operational efficiency of a company.

The Gross Margin of Zebra Technologies (ZBRA) increased from 0.4539 in 2022 to 0.4631 in 2023. This position it relatively better in comparison with its historical dips; the company went from a 20-year low of 0.4502 in 2015 to current levels under economic conditions showing variations in operational costs, market demands, and raw material prices. Given the Gross Margin for the industry median in 2023 is lower at 0.3903, Zebra Technologies seems to have better retained profitability against industry fluctuations. This upward trajectory is positive, reflecting well on operational efficiencies. Hence, 1 point is added in the Piotroski analysis for this favourable trend.

Asset Turnover Ratio is growing?

Asset Turnover indicates how efficiently a company uses its assets to generate sales. It is calculated by dividing sales by average total assets.

The Asset Turnover for Zebra Technologies in 2023 is 0.618, down from 0.8412 in 2022. This reduction signifies a decline in efficiency in using assets to generate revenue year over year. Over a 20-year span, the highest asset turnover was 1.1196 in 2010, indicating the company used its assets most efficiently then. The current downward trend suggests some inefficiencies or reduced sales relative to the company's asset base in the most recent year. As per the criterion, since the Asset Turnover decreased, it gets 0 points.