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Flextronics International Ltd (NAS:FLEX)
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 = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Flextronics International Ltd has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

FLEX' s 10-Year Piotroski F-Score Range
Min: 1   Max: 9
Current: 8

1
9

During the past 13 years, the highest Piotroski F-Score of Flextronics International Ltd was 9. The lowest was 1. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 42.975 + 173.887 + 138.903 + 152.899 = $509 Mil.
Cash Flow from Operations was 98.153 + -81.169 + 387.414 + 363.179 = $768 Mil.
Revenue was 6723.934 + 6642.745 + 6528.517 + 7025.054 = $26,920 Mil.
Gross Profit was 362.144 + 380.785 + 377.081 + 408.657 = $1,529 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(12817.037 + 12500.15 + 12067.824 + 11919.873 + 12090.473) / 5 = $12279.0714 Mil.
Total Assets at the begining of this year (Dec13) was $12,817 Mil.
Long-Term Debt was $2,046 Mil.
Total Current Assets was $9,133 Mil.
Total Current Liabilities was $7,209 Mil.
Net Income was -49.316 + 59.257 + 118.205 + 145.157 = $273 Mil.

Revenue was 5295.318 + 5791.125 + 6410.106 + 7183.442 = $24,680 Mil.
Gross Profit was 195.657 + 311.035 + 368.423 + 398.619 = $1,274 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(11153.694 + 10591.555 + 11168.924 + 12004.485 + 12817.037) / 5 = $11547.139 Mil.
Total Assets at the begining of last year (Dec12) was $11,154 Mil.
Long-Term Debt was $2,001 Mil.
Total Current Assets was $9,693 Mil.
Total Current Liabilities was $8,064 Mil.

Profitability

Question 1. 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.

Flextronics International Ltd's current net income (TTM) was 509. ==> Positive ==> Score 1.

Question 2. 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.

Flextronics International Ltd's current cash flow from operations (TTM) was 768. ==> Positive ==> Score 1.

Question 3. 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)/Total Assets at the Beginning of This Year (Dec13)
=508.664/12817.037
=0.03968655

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=273.303/11153.694
=0.02450336

Flextronics International Ltd's return on assets of this year was 0.03968655. Flextronics International Ltd's return on assets of last year was 0.02450336. ==> This year is higher. ==> Score 1.

Question 4. 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.

Flextronics International Ltd's current net income (TTM) was 509. Flextronics International Ltd's current cash flow from operations (TTM) was 768. ==> 768 > 509 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=2045.569/12279.0714
=0.16658988

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=2000.694/11547.139
=0.17326318

Flextronics International Ltd's gearing of this year was 0.16658988. Flextronics International Ltd's gearing of last year was 0.17326318. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Dec14)=Total Current Assets/Total Current Liabilities
=9133.22/7208.722
=1.26696799

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=9692.923/8064.492
=1.20192605

Flextronics International Ltd's current ratio of this year was 1.26696799. Flextronics International Ltd's current ratio of last year was 1.20192605. ==> This year's current ratio is higher. ==> Score 1.

Question 7. 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.

Flextronics International Ltd's number of shares in issue this year was 587.2. Flextronics International Ltd's number of shares in issue last year was 618.7. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. 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
=1528.667/26920.25
=0.05678502

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1273.734/24679.991
=0.05160999

Flextronics International Ltd's gross margin of this year was 0.05678502. Flextronics International Ltd's gross margin of last year was 0.05160999. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year 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 (TTM)/Total Assets at the Beginning of This Year (Dec13)
=26920.25/12817.037
=2.10034893

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=24679.991/11153.694
=2.21271903

Flextronics International Ltd's asset turnover of this year was 2.10034893. Flextronics International Ltd's asset turnover of last year was 2.21271903. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+1+1+1+1+0
=8

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Flextronics International Ltd 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


Historical Data

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

Flextronics International Ltd Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Question 1 1110011111
Question 2 1111111111
Question 3 1010011001
Question 4 1101111111
Question 5 1110100110
Question 6 0111011100
Question 7 0010001111
Question 8 1010011001
Question 9 0011011001
F-score 6584378657

Flextronics International Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 0000001111
Question 4 1111111111
Question 5 1111000011
Question 6 1000000111
Question 7 1111111111
Question 8 1100001111
Question 9 0000111110
F-score 7655557898
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