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

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Analog Devices Inc has an F-score of 5 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: 5

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 (Jul14) TTM:Last Year (Jul13) TTM:
Net Income was 201.554 + 152.586 + 187.433 + 180.606 = $722 Mil.
Cash Flow from Operations was 282.165 + 157.473 + 238.424 + 213.442 = $892 Mil.
Revenue was 678.133 + 628.238 + 694.536 + 727.752 = $2,729 Mil.
Gross Profit was 444.87 + 409.118 + 458.743 + 476.29 = $1,789 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Jul14) was
(6138.626 + 6381.75 + 6399.468 + 6594.951 + 8973.465) / 5 = $6,898 Mil.
Total Assets as of Jul13 was $6,139 Mil.
Long-Term Debt was $873 Mil.
Total Current Assets was $5,924 Mil.
Total Current Liabilities was $2,623 Mil.
Net Income was 179.187 + 131.222 + 164.472 + 176.239 = $651 Mil.

Revenue was 694.964 + 622.134 + 659.25 + 674.172 = $2,651 Mil.
Gross Profit was 443.282 + 390.284 + 422.195 + 435.062 = $1,691 Mil.
Average Total Assets from the begining of last year (Jul12)
to the end of last year (Jul13) was
(5456.622 + 5620.347 + 5716.808 + 5841.036 + 6138.626) / 5 = $5,755 Mil.
Total Assets as of Jul12 was $5,457 Mil.
Long-Term Debt was $872 Mil.
Total Current Assets was $5,244 Mil.
Total Current Liabilities was $492 Mil.

Profitability

Q1. Return on Assets (ROA)

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

Score 1 if positive, 0 if negative.

Analog Devices Inc's current net income (ttm) was 722. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

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

Score 1 if positive, 0 if negative.

Analog Devices Inc's current cash flow from operations (ttm) was 892. ==> Positive ==> Score 1.

Q3. 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)/Beginning of This Year Total Assets (Jul13)
=722.179/6138.626
=0.11764506

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Jul12)
=651.12/5456.622
=0.11932657

Analog Devices Inc's return on assets of this year was 0.11764506. Analog Devices Inc's return on assets of last year was 0.11932657. ==> Last year is higher ==> Score 0.

Q4. 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 722. Analog Devices Inc's current cash flow from operations (ttm) was 892. ==> 892 > 722 ==> CFROA > ROA ==> Score 1.

Funding

Q5. 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: Jul14)=Long-Term Debt/Average Total Assets from Jul13 to Jul14
=872.652/6897.652
=0.12651436

Gearing (Last Year: Jul13)=Long-Term Debt/Average Total Assets from Jul12 to Jul13
=872.104/5754.6878
=0.15154671

Analog Devices Inc's gearing of this year was 0.12651436. Analog Devices Inc's gearing of last year was 0.15154671. ==> This year is lower or equal to last year. ==> Score 1.

Q6. 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: Jul14)=Total Current Assets/Total Current Liabilities
=5923.884/2622.526
=2.25884662

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=5244.49/491.809
=10.66367228

Analog Devices Inc's current ratio of this year was 2.25884662. Analog Devices Inc's current ratio of last year was 10.66367228. ==> Last year's current ratio is higher ==> Score 0.

Q7. 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 318.9. Analog Devices Inc's number of shares in issue last year was 315.3. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Q8. 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
=1789.021/2728.659
=0.6556411

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1690.823/2650.52
=0.63792124

Analog Devices Inc's gross margin of this year was 0.6556411. Analog Devices Inc's gross margin of last year was 0.63792124. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by begining of the year total assets) 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)/Beginning of This Year Total Assets (Jul13)
=2728.659/6138.626
=0.44450647

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Jul12)
=2650.52/5456.622
=0.48574374

Analog Devices Inc's asset turnover of this year was 0.44450647. Analog Devices Inc's asset turnover of last year was 0.48574374. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+0+0+1+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

Analog Devices Inc has an F-score of 5 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, Altman Z-Score, Beneish M-Score


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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1111111111
Q2 1111111111
Q3 1011101000
Q4 1111011111
Q5 1111101011
Q6 0010110111
Q7 0111110010
Q8 1011101100
Q9 1011101000
F-score 7598857565

Analog Devices Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Q1 1111111111
Q2 1111111111
Q3 0000000010
Q4 1111111111
Q5 1111111001
Q6 1111111110
Q7 1100000000
Q8 0000000111
Q9 0000000000
F-score 6655555565
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