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Danaher Corp (NYSE:DHR)
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

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

DHR' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Danaher Corp was 9. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 789.3 + 579.7 + 676.4 + 680.6 = $2,726 Mil.
Cash Flow from Operations was 1078.2 + 511.2 + 991.7 + 1016.1 = $3,597 Mil.
Revenue was 5266.7 + 4662.7 + 4963.6 + 4870.3 = $19,763 Mil.
Gross Profit was 2711.7 + 2452.9 + 2620.2 + 2565.7 = $10,351 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(33721.2 + 34672.2 + 35042.6 + 35652.1 + 35535.9) / 5 = $34,925 Mil.
Total Assets was $35,536 Mil.
Long-Term Debt was $2,965 Mil.
Total Current Assets was $9,990 Mil.
Total Current Liabilities was $4,471 Mil.
Net Income was 630.4 + 691.9 + 616.8 + 597 = $2,536 Mil.

Revenue was 4975.2 + 4444.7 + 4737.5 + 4669.1 = $18,827 Mil.
Gross Profit was 2545.3 + 2325.7 + 2495.5 + 2424.7 = $9,791 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(31585.42 + 32941 + 32469.3 + 33109 + 33721.2) / 5 = $32,765 Mil.
Total Assets was $33,721 Mil.
Long-Term Debt was $3,446 Mil.
Total Current Assets was $8,024 Mil.
Total Current Liabilities was $4,279 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Danaher Corp's current net income (ttm) was 2,726. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Danaher Corp's current cash flow from operations (ttm) was 3,597. ==> 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)/Average Total Assets from Sep13 to Sep14
=2726/34924.8
=0.07805342

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Sep12 to Sep13
=2536.1/32765.184
=0.07740228

Danaher Corp's return on assets of this year was 0.07805342. Danaher Corp's return on assets of last year was 0.07740228. ==> 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.

Danaher Corp's current net income (ttm) was 2,726. Danaher Corp's current cash flow from operations (ttm) was 3,597. ==> 3,597 > 2,726 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep14)=Long-Term Debt/Total Assets
=2964.7/35535.9
=0.08342831

Gearing (Last Year: Sep13)=Long-Term Debt/Total Assets
=3445.5/33721.2
=0.10217608

Danaher Corp's gearing of this year was 0.08342831. Danaher Corp's gearing of last year was 0.10217608. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=9989.5/4471.1
=2.23423766

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=8023.7/4279.4
=1.87495911

Danaher Corp's current ratio of this year was 2.23423766. Danaher Corp's current ratio of last year was 1.87495911. ==> 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.

Danaher Corp's number of shares in issue this year was 716.2. Danaher Corp's number of shares in issue last year was 711.9. ==> 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
=10350.5/19763.3
=0.52372326

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=9791.2/18826.5
=0.52007543

Danaher Corp's gross margin of this year was 0.52372326. Danaher Corp's gross margin of last year was 0.52007543. ==> 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 average total assets throughout 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)/Average Total Assets from Sep13 to Sep14
=19763.3/34924.8
=0.56588155

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Sep12 to Sep13
=18826.5/32765.184
=0.57458856

Danaher Corp's asset turnover of this year was 0.56588155. Danaher Corp's asset turnover of last year was 0.57458856. ==> 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+0+1+0
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Danaher 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, 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.

Danaher Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1111001111
Q4 1111111111
Q5 1100101011
Q6 0010110011
Q7 0010010001
Q8 1111111011
Q9 1111101110
F-score 7786767588

Danaher Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 0000111001
Q4 1111111111
Q5 1111111111
Q6 1111111111
Q7 0011110000
Q8 0011111111
Q9 1100000000
F-score 6677887667
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