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Brocade Communications Systems Inc (NAS:BRCD)
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 = 8 or 9
Bad or low score = 0 or 1

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

BRCD' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 8

2
9

During the past 13 years, the highest Piotroski F-Score of Brocade Communications Systems Inc was 9. The lowest was 2. 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 64.233 + 80.884 + -13.684 + 87.352 = $219 Mil.
Cash Flow from Operations was 169.769 + 109.469 + 168.244 + 106.031 = $554 Mil.
Revenue was 558.8 + 564.535 + 536.91 + 545.464 = $2,206 Mil.
Gross Profit was 362.64 + 372.67 + 354.292 + 361.713 = $1,451 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Jul14) was
(3521.731 + 3621.391 + 3577.837 + 3608.909 + 3601.89) / 5 = $3,586 Mil.
Total Assets as of Jul13 was $3,522 Mil.
Long-Term Debt was $595 Mil.
Total Current Assets was $1,542 Mil.
Total Current Liabilities was $504 Mil.
Net Income was 54.001 + -21.255 + 46.949 + 118.696 = $198 Mil.

Revenue was 578.357 + 588.729 + 538.784 + 536.551 = $2,242 Mil.
Gross Profit was 360.69 + 373.925 + 334.112 + 338.202 = $1,407 Mil.
Average Total Assets from the begining of last year (Jul12)
to the end of last year (Jul13) was
(3497.524 + 3581.261 + 3772.182 + 3510.823 + 3521.731) / 5 = $3,577 Mil.
Total Assets as of Jul12 was $3,498 Mil.
Long-Term Debt was $597 Mil.
Total Current Assets was $1,225 Mil.
Total Current Liabilities was $503 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.

Brocade Communications Systems Inc's current net income (ttm) was 219. ==> 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.

Brocade Communications Systems Inc's current cash flow from operations (ttm) was 554. ==> 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)
=218.785/3521.731
=0.06212428

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Jul12)
=198.391/3497.524
=0.05672327

Brocade Communications Systems Inc's return on assets of this year was 0.06212428. Brocade Communications Systems Inc's return on assets of last year was 0.05672327. ==> 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.

Brocade Communications Systems Inc's current net income (ttm) was 219. Brocade Communications Systems Inc's current cash flow from operations (ttm) was 554. ==> 554 > 219 ==> 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
=595.42/3586.3516
=0.16602388

Gearing (Last Year: Jul13)=Long-Term Debt/Average Total Assets from Jul12 to Jul13
=596.524/3576.7042
=0.16678036

Brocade Communications Systems Inc's gearing of this year was 0.16602388. Brocade Communications Systems Inc's gearing of last year was 0.16678036. ==> 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
=1542.16/504.434
=3.05720867

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=1224.587/502.638
=2.43631998

Brocade Communications Systems Inc's current ratio of this year was 3.05720867. Brocade Communications Systems Inc's current ratio of last year was 2.43631998. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

Brocade Communications Systems Inc's number of shares in issue this year was 441.8. Brocade Communications Systems Inc's number of shares in issue last year was 461.3. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=1451.315/2205.709
=0.65798118

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1406.929/2242.421
=0.62741519

Brocade Communications Systems Inc's gross margin of this year was 0.65798118. Brocade Communications Systems Inc's gross margin of last year was 0.62741519. ==> 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)
=2205.709/3521.731
=0.62631388

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Jul12)
=2242.421/3497.524
=0.64114528

Brocade Communications Systems Inc's asset turnover of this year was 0.62631388. Brocade Communications Systems Inc's asset turnover of last year was 0.64114528. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+1+1+1+0
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Brocade Communications Systems 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, 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.

Brocade Communications Systems Inc Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 0111101111
Q2 1111111111
Q3 1111101011
Q4 1111111111
Q5 1110011111
Q6 1010001011
Q7 0000000011
Q8 1110101111
Q9 1111000110
F-score 7785537698

Brocade Communications Systems Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Q1 1111111111
Q2 1111111111
Q3 0111111111
Q4 1111111111
Q5 1111111111
Q6 1010111111
Q7 1111111111
Q8 1111111111
Q9 0111110000
F-score 7898998888
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