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

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

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 8. It is a good or high score, which usually indicates a very healthy situation.

ADI' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 9
Current: 8

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 (Jul16) TTM:Last Year (Jul15) TTM:
Net Income was 96.305 + 164.504 + 170.573 + 230.43 = $662 Mil.
Cash Flow from Operations was 197.975 + 219.705 + 320.203 + 254.003 = $992 Mil.
Revenue was 978.722 + 769.429 + 778.766 + 869.591 = $3,397 Mil.
Gross Profit was 641.796 + 477.293 + 510.903 + 572.29 = $2,202 Mil.
Average Total Assets from the begining of this year (Jul15)
to the end of this year (Jul16) was
(7134.701 + 7058.777 + 7598.081 + 7570.292 + 7685.053) / 5 = $7409.3808 Mil.
Total Assets at the begining of this year (Jul15) was $7,135 Mil.
Long-Term Debt was $1,732 Mil.
Total Current Assets was $4,728 Mil.
Total Current Liabilities was $679 Mil.
Net Income was 108.695 + 178.757 + 205.338 + 216.478 = $709 Mil.

Revenue was 814.247 + 771.986 + 821.019 + 863.365 = $3,271 Mil.
Gross Profit was 486.037 + 503.607 + 544.822 + 569.037 = $2,104 Mil.
Average Total Assets from the begining of last year (Jul14)
to the end of last year (Jul15) was
(8973.465 + 6859.69 + 6821.156 + 7048.475 + 7134.701) / 5 = $7367.4974 Mil.
Total Assets at the begining of last year (Jul14) was $8,973 Mil.
Long-Term Debt was $498 Mil.
Total Current Assets was $4,150 Mil.
Total Current Liabilities was $1,058 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 662. ==> 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 992. ==> 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 (Jul15)
=661.812/7134.701
=0.0927596

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=709.268/8973.465
=0.07904059

Analog Devices Inc's return on assets of this year was 0.0927596. Analog Devices Inc's return on assets of last year was 0.07904059. ==> This year is higher. ==> Score 1.

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 662. Analog Devices Inc's current cash flow from operations (TTM) was 992. ==> 992 > 662 ==> 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: Jul16)=Long-Term Debt/Average Total Assets from Jul15 to Jul16
=1731.758/7409.3808
=0.23372506

Gearing (Last Year: Jul15)=Long-Term Debt/Average Total Assets from Jul14 to Jul15
=498.448/7367.4974
=0.067655

Analog Devices Inc's gearing of this year was 0.23372506. Analog Devices Inc's gearing of last year was 0.067655. ==> Last year is lower than this year ==> Score 0.

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: Jul16)=Total Current Assets/Total Current Liabilities
=4727.888/678.693
=6.96616585

Current Ratio (Last Year: Jul15)=Total Current Assets/Total Current Liabilities
=4149.892/1057.77
=3.92324607

Analog Devices Inc's current ratio of this year was 6.96616585. Analog Devices Inc's current ratio of last year was 3.92324607. ==> This year's current ratio is higher. ==> Score 1.

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 310.6. Analog Devices Inc's number of shares in issue last year was 318.2. ==> 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
=2202.282/3396.508
=0.64839594

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2103.503/3270.617
=0.64315174

Analog Devices Inc's gross margin of this year was 0.64839594. Analog Devices Inc's gross margin of last year was 0.64315174. ==> This year's gross margin is higher. ==> Score 1.

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 (Jul15)
=3396.508/7134.701
=0.47605471

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=3270.617/8973.465
=0.36447649

Analog Devices Inc's asset turnover of this year was 0.47605471. Analog Devices Inc's asset turnover of last year was 0.36447649. ==> 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+1+1+0+1+1+1+1
=8

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

Analog Devices Inc has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.


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

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Question 1 1111111111
Question 2 1111111111
Question 3 1110100001
Question 4 1101111111
Question 5 1110101111
Question 6 1011011100
Question 7 1111001001
Question 8 1100110001
Question 9 1110100001
F-score 9875756548

Analog Devices Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
Question 1 1111111111
Question 2 1111111111
Question 3 1000001001
Question 4 1111111111
Question 5 0111111000
Question 6 1000010111
Question 7 0001111111
Question 8 1100001111
Question 9 0001101111
F-score 6546668778
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