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Danaher Corp (NYSE:DHR)
Piotroski F-Score
6 (As of Today)

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 6 indicating the company's financial situation is typical for a stable company.

DHR' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 6

4
9

During the past 13 years, the highest Piotroski F-Score of Danaher Corp 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 676.4 + 579.7 + 789.3 + 597 = $2,642 Mil.
Cash Flow from Operations was 991.7 + 511.2 + 1078.2 + 971.4 = $3,553 Mil.
Revenue was 4963.6 + 4662.7 + 5266.7 + 4669.1 = $19,562 Mil.
Gross Profit was 2620.2 + 2452.9 + 2711.7 + 2424.7 = $10,210 Mil.
Total Assets at the begining of this year (Jun13) was $33,109 Mil.
Total Assets was $35,652 Mil.
Long-Term Debt was $3,020 Mil.
Total Current Assets was $9,507 Mil.
Total Current Liabilities was $4,407 Mil.
Net Income was 616.8 + 691.9 + 630.4 + 548.7 = $2,488 Mil.

Revenue was 4737.5 + 4444.7 + 4975.2 + 4415.5 = $18,573 Mil.
Gross Profit was 2495.5 + 2325.7 + 2545.3 + 2278 = $9,645 Mil.
Total Assets at the begining of last year (Jun12) was $31,171 Mil.
Total Assets was $33,109 Mil.
Long-Term Debt was $4,101 Mil.
Total Current Assets was $8,231 Mil.
Total Current Liabilities was $4,133 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.

Danaher Corp's current net income was 2,642. ==> 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.

Danaher Corp's current cash flow from operations was 3,553. ==> 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)
=2642.4/33109
=0.07980912

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=2487.8/31170.583
=0.07981243

Danaher Corp's return on assets of this year was 0.07980912. Danaher Corp's return on assets of last year was 0.07981243. ==> 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.

Danaher Corp's current net income was 2,642. Danaher Corp's current cash flow from operations was 3,553. ==> 3,553 > 2,642 ==> 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
=3020/35652.1
=0.08470749

Gearing (Last Year)=Long-Term Debt/Total Assets
=4100.9/33109
=0.12386058

Danaher Corp's gearing of this year was 0.08470749. Danaher Corp's gearing of last year was 0.12386058. ==> 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
=9507.3/4406.7
=2.15746477

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=8231/4132.5
=1.99177253

Danaher Corp's current ratio of this year was 2.15746477. Danaher Corp's current ratio of last year was 1.99177253. ==> 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 715.6. Danaher Corp's number of shares in issue last year was 709.8. ==> 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)=Gross Profit/Revenue
=10209.5/19562.1
=0.52190205

Gross Margin (Last Year)=Gross Profit/Revenue
=9644.5/18572.9
=0.51927809

Danaher Corp's gross margin of this year was 0.52190205. Danaher Corp's gross margin of last year was 0.51927809. ==> 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)
=19562.1/33109
=0.59083935

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=18572.9/31170.583
=0.59584705

Danaher Corp's asset turnover of this year was 0.59083935. Danaher Corp's asset turnover of last year was 0.59584705. ==> 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+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Danaher Corp has an F-score of 6 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.

Danaher Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1010001101
Q4 1111111111
Q5 1100101011
Q6 0010110011
Q7 0010010001
Q8 1111111011
Q9 1010001100
F-score 7584667568

Danaher Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 1000011100
Q4 1111111111
Q5 0111111111
Q6 0111111111
Q7 0001111000
Q8 0001111111
Q9 1000011000
F-score 5557799766
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