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Analog Devices Inc (NAS:ADI)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Analog Devices Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

ADI' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 6

4
9

During the past 13 years, the highest Piotroski F-Score of Analog Devices Inc was 9. The lowest was 4. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Net Income was 180.606 + 108.695 + 178.757 + 205.338 = $673 Mil.
Cash Flow from Operations was 213.442 + 262.263 + 168.653 + 344.031 = $988 Mil.
Revenue was 727.752 + 814.247 + 771.986 + 821.019 = $3,135 Mil.
Gross Profit was 476.29 + 486.037 + 503.607 + 544.822 = $2,011 Mil.
Average Total Assets from the begining of this year (Apr14)
to the end of this year (Apr15) was
(6594.951 + 8973.465 + 6859.69 + 6821.156 + 7048.475) / 5 = $7259.5474 Mil.
Total Assets at the begining of this year (Apr14) was $6,595 Mil.
Long-Term Debt was $498 Mil.
Total Current Assets was $4,046 Mil.
Total Current Liabilities was $1,068 Mil.
Net Income was 176.239 + 201.554 + 152.586 + 187.433 = $718 Mil.

Revenue was 674.172 + 678.133 + 628.238 + 694.536 = $2,675 Mil.
Gross Profit was 435.062 + 444.87 + 409.118 + 458.743 = $1,748 Mil.
Average Total Assets from the begining of last year (Apr13)
to the end of last year (Apr14) was
(5841.036 + 6138.626 + 6381.75 + 6399.468 + 6594.951) / 5 = $6271.1662 Mil.
Total Assets at the begining of last year (Apr13) was $5,841 Mil.
Long-Term Debt was $873 Mil.
Total Current Assets was $5,638 Mil.
Total Current Liabilities was $571 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Analog Devices Inc's current net income (TTM) was 673. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Analog Devices Inc's current cash flow from operations (TTM) was 988. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Apr14)
=673.396/6594.951
=0.10210781

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Apr13)
=717.812/5841.036
=0.12289121

Analog Devices Inc's return on assets of this year was 0.10210781. Analog Devices Inc's return on assets of last year was 0.12289121. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Analog Devices Inc's current net income (TTM) was 673. Analog Devices Inc's current cash flow from operations (TTM) was 988. ==> 988 > 673 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Apr15)=Long-Term Debt/Average Total Assets from Apr14 to Apr15
=498.399/7259.5474
=0.06865428

Gearing (Last Year: Apr14)=Long-Term Debt/Average Total Assets from Apr13 to Apr14
=872.515/6271.1662
=0.13913122

Analog Devices Inc's gearing of this year was 0.06865428. Analog Devices Inc's gearing of last year was 0.13913122. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Apr15)=Total Current Assets/Total Current Liabilities
=4045.761/1068.219
=3.7873891

Current Ratio (Last Year: Apr14)=Total Current Assets/Total Current Liabilities
=5638.032/571.202
=9.87046964

Analog Devices Inc's current ratio of this year was 3.7873891. Analog Devices Inc's current ratio of last year was 9.87046964. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Analog Devices Inc's number of shares in issue this year was 317. Analog Devices Inc's number of shares in issue last year was 318.3. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=2010.756/3135.004
=0.64138866

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1747.793/2675.079
=0.65336127

Analog Devices Inc's gross margin of this year was 0.64138866. Analog Devices Inc's gross margin of last year was 0.65336127. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Apr14)
=3135.004/6594.951
=0.47536426

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Apr13)
=2675.079/5841.036
=0.45798023

Analog Devices Inc's asset turnover of this year was 0.47536426. Analog Devices Inc's asset turnover of last year was 0.45798023. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+1+0+1
=6

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Analog Devices Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Analog Devices Inc Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Question 1 1111111111
Question 2 1111111111
Question 3 0111010000
Question 4 1110111111
Question 5 1111010111
Question 6 0101101110
Question 7 1111100100
Question 8 1100011000
Question 9 0111010000
F-score 6977575654

Analog Devices Inc Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
Question 1 1111111111
Question 2 1111111111
Question 3 0000010000
Question 4 1111111111
Question 5 1111001111
Question 6 1111110000
Question 7 0000000111
Question 8 0000111000
Question 9 0000000011
F-score 5555565566
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