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Cerner Corp (NAS:CERN)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, 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

Cerner Corp has an F-score of 7 indicating the company's financial situation is typical for a stable company.

CERN' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 7

3
8

During the past 13 years, the highest Piotroski F-Score of Cerner Corp was 8. The lowest was 3. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 129.033 + 119.526 + 60.063 + 115.344 = $424 Mil.
Cash Flow from Operations was 248.271 + 155.787 + 141.48 + 164.23 = $710 Mil.
Revenue was 851.762 + 784.761 + 795.328 + 727.83 = $3,160 Mil.
Gross Profit was 689.393 + 655.662 + 653.212 + 608.253 = $2,607 Mil.
Total Assets at the begining of this year (Jun13) was $3,844 Mil.
Total Assets was $4,265 Mil.
Long-Term Debt was $96 Mil.
Total Current Assets was $1,903 Mil.
Total Current Liabilities was $673 Mil.
Net Income was 112.907 + 110.04 + 111.808 + 98.887 = $434 Mil.

Revenue was 707.561 + 680.029 + 710.384 + 676.482 = $2,774 Mil.
Gross Profit was 581.761 + 552.8 + 557.273 + 526.904 = $2,219 Mil.
Total Assets at the begining of last year (Jun12) was $3,299 Mil.
Total Assets was $3,844 Mil.
Long-Term Debt was $133 Mil.
Total Current Assets was $1,713 Mil.
Total Current Liabilities was $605 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.

Cerner Corp's current net income was 424. ==> Positive ==> Score 1.

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.

Cerner Corp's current cash flow from operations was 710. ==> 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 (Jun13)
=423.966/3843.941
=0.11029462

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=433.642/3299.044
=0.13144475

Cerner Corp's return on assets of this year was 0.11029462. Cerner Corp's return on assets of last year was 0.13144475. ==> 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.

Cerner Corp's current net income was 424. Cerner Corp's current cash flow from operations was 710. ==> 710 > 424 ==> 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)=Long-Term Debt/Total Assets
=96.084/4265.275
=0.02252704

Gearing (Last Year)=Long-Term Debt/Total Assets
=132.971/3843.941
=0.03459236

Cerner Corp's gearing of this year was 0.02252704. Cerner Corp's gearing of last year was 0.03459236. ==> 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)=Total Current Assets/Total Current Liabilities
=1903.269/672.522
=2.8300472

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1713.296/605.44
=2.82983615

Cerner Corp's current ratio of this year was 2.8300472. Cerner Corp's current ratio of last year was 2.82983615. ==> 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.

Cerner Corp's number of shares in issue this year was 349.8. Cerner Corp's number of shares in issue last year was 352.5. ==> 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)=Gross Profit/Revenue
=2606.52/3159.681
=0.82493138

Gross Margin (Last Year)=Gross Profit/Revenue
=2218.738/2774.456
=0.799702

Cerner Corp's gross margin of this year was 0.82493138. Cerner Corp's gross margin of last year was 0.799702. ==> This year's gross margin is higher. ==> Score 1.

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 (Jun13)
=3159.681/3843.941
=0.82198998

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=2774.456/3299.044
=0.84098787

Cerner Corp's asset turnover of this year was 0.82198998. Cerner Corp's asset turnover of last year was 0.84098787. ==> 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+1+1+1+0
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Cerner Corp has an F-score of 7 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.

Cerner Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1101101110
Q4 1111111111
Q5 1011111001
Q6 1001011000
Q7 0000000000
Q8 1011110001
Q9 1100000100
F-score 8557666545

Cerner Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 1111110000
Q4 1111111111
Q5 0000011111
Q6 0000000011
Q7 0000001111
Q8 0000111111
Q9 1110000000
F-score 5554566677
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