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Alere Inc (NYSE:ALR)
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

Alere Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

ALR' s 10-Year Piotroski F-Score Range
Min: 2   Max: 6
Current: 5

2
6

During the past 13 years, the highest Piotroski F-Score of Alere Inc was 6. The lowest was 2. And the median was 5.


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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was -3.687 + -19.448 + -60.569 + 12.45 = $-71 Mil.
Cash Flow from Operations was 85.672 + 60.346 + 27.698 + 71.061 = $245 Mil.
Revenue was 772.326 + 753.882 + 763.985 + 739.249 = $3,029 Mil.
Gross Profit was 384.349 + 368.646 + 384.487 + 364.257 = $1,502 Mil.
Total Assets at the begining of this year (Dec12) was $7,068 Mil.
Total Assets was $7,061 Mil.
Long-Term Debt was $3,787 Mil.
Total Current Assets was $1,472 Mil.
Total Current Liabilities was $673 Mil.
Net Income was -62.678 + -3.803 + -12.915 + 1.214 = $-78 Mil.

Revenue was 755.763 + 691.416 + 700.517 + 671.129 = $2,819 Mil.
Gross Profit was 373.868 + 345.775 + 355.608 + 353.071 = $1,428 Mil.
Total Assets at the begining of last year (Dec11) was $6,673 Mil.
Total Assets was $7,068 Mil.
Long-Term Debt was $3,642 Mil.
Total Current Assets was $1,407 Mil.
Total Current Liabilities was $649 Mil.

Profitability

Q1. 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.

Alere Inc's current net income was -71. ==> Negative ==> Score 0.

Q2. 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.

Alere Inc's current cash flow from operations was 245. ==> 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/Total Assets at the beginning of this year (Dec12)
=-71.254/7067.928
=-0.01008131

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=-78.182/6672.701
=-0.01171669

Alere Inc's return on assets of this year was -0.01008131. Alere Inc's return on assets of last year was -0.01171669. ==> This year is higher. ==> Score 1.

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.

Alere Inc's current net income was -71. Alere Inc's current cash flow from operations was 245. ==> 245 > -71 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=3787.195/7060.814
=0.53636804

Gearing (Last Year)=Long-Term Debt/Total Assets
=3641.592/7067.928
=0.51522766

Alere Inc's gearing of this year was 0.53636804. Alere Inc's gearing of last year was 0.51522766. ==> Last year is lower ==> Score 0.

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)=Total Current Assets/Total Current Liabilities
=1472.414/673.186
=2.18723206

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1406.737/648.809
=2.16818355

Alere Inc's current ratio of this year was 2.18723206. Alere Inc's current ratio of last year was 2.16818355. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

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

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

Alere Inc's number of shares in issue this year was 81.9. Alere Inc's number of shares in issue last year was 80.9. ==> There is more 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)=Gross Profit/Revenue
=1501.739/3029.442
=0.49571472

Gross Margin (Last Year)=Gross Profit/Revenue
=1428.322/2818.825
=0.50670829

Alere Inc's gross margin of this year was 0.49571472. Alere Inc's gross margin of last year was 0.50670829. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Dec12)
=3029.442/7067.928
=0.42861812

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=2818.825/6672.701
=0.42244138

Alere Inc's asset turnover of this year was 0.42861812. Alere Inc's asset turnover of last year was 0.42244138. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Alere 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


Historical Data

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

Alere Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 0000010000
Q2 1111111111
Q3 0010110111
Q4 1111111111
Q5 0110100000
Q6 1111010111
Q7 0000000110
Q8 0011110000
Q9 0101000111
F-score 3565562665

Alere Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 0000000000
Q2 1111111111
Q3 0111111111
Q4 1111111111
Q5 0000000000
Q6 1111010111
Q7 0111100000
Q8 0000000000
Q9 1111111111
F-score 4666554555
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