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Fifth Street Finance Corporation (NAS:FSC)
Piotroski F-Score
1 (As of Today)

Warning Sign:

Piotroski F-Score of 1 is low, which usually implies poor business operation.

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Fifth Street Finance Corporation has an F-score of 1. It is a bad or low score, which usually implies poor business operation.

FSC' s 10-Year Piotroski F-Score Range
Min: 1   Max: 4
Current: 1

1
4

During the past 6 years, the highest Piotroski F-Score of Fifth Street Finance Corporation was 4. The lowest was 1. And the median was 2.


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 26.137 + 33.706 + 30.1 + 20.287 = $110.2 Mil.
Cash Flow from Operations was -27.987 + -475.428 + -280.783 + 107.268 = $-676.9 Mil.
Revenue was 47.694 + 61.118 + 59.299 + 59.537 = $227.6 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0.0 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(1896.848 + 2072.333 + 2454.483 + 2792.315 + 2743.696) / 5 = $2,391.9 Mil.
Total Assets as of Jun13 was $1,896.8 Mil.
Long-Term Debt was $795.7 Mil.
Total Current Assets was $0.0 Mil.
Total Current Liabilities was $0.0 Mil.
Net Income was 27.072 + 17.843 + 31.834 + 26.006 = $102.8 Mil.

Revenue was 36.224 + 44.627 + 46.926 + 48.896 = $176.7 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0.0 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(1324.491 + 1389.002 + 1646.684 + 1816.347 + 1896.848) / 5 = $1,614.7 Mil.
Total Assets as of Jun12 was $1,324.5 Mil.
Long-Term Debt was $276.3 Mil.
Total Current Assets was $0.0 Mil.
Total Current Liabilities was $0.0 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.

Fifth Street Finance Corporation's current net income (ttm) was 110.2. ==> 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.

Fifth Street Finance Corporation's current cash flow from operations (ttm) was -676.9. ==> Negative ==> Score 0.

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 (Jun13)
=110.23/1896.848
=0.05811219

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Jun12)
=102.755/1324.491
=0.07758075

Fifth Street Finance Corporation's return on assets of this year was 0.05811219. Fifth Street Finance Corporation's return on assets of last year was 0.07758075. ==> 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.

Fifth Street Finance Corporation's current net income (ttm) was 110.2. Fifth Street Finance Corporation's current cash flow from operations (ttm) was -676.9. ==> -676.9 =< 110.2 ==> CFROA =< ROA ==> Score 0.

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: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=795.683/2391.935
=0.33265243

Gearing (Last Year: Jun13)=Long-Term Debt/Average Total Assets from Jun12 to Jun13
=276.25/1614.6744
=0.17108712

Fifth Street Finance Corporation's gearing of this year was 0.33265243. Fifth Street Finance Corporation's gearing of last year was 0.17108712. ==> Last year is lower than this year ==> Score 0.

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: Jun14)=Total Current Assets/Total Current Liabilities
=0/0
=

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=0/0
=

Fifth Street Finance Corporation's current ratio of this year was . Fifth Street Finance Corporation's current ratio of last year was . ==> Last year's current ratio is higher ==> Score 0.

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.

Fifth Street Finance Corporation's number of shares in issue this year was 146.9. Fifth Street Finance Corporation's number of shares in issue last year was 126.1. ==> 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
=0/227.648
=0

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=0/176.673
=0

Fifth Street Finance Corporation's gross margin of this year was 0. Fifth Street Finance Corporation's gross margin of last year was 0. ==> Last year's gross margin is higher ==> Score 0.

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 (Jun13)
=227.648/1896.848
=0.12001383

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Jun12)
=176.673/1324.491
=0.13338935

Fifth Street Finance Corporation's asset turnover of this year was 0.12001383. Fifth Street Finance Corporation's asset turnover of last year was 0.13338935. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Fifth Street Finance Corporation has an F-score of 1. It is a bad or low score, which usually implies poor business operation.


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.

Fifth Street Finance Corporation Annual Data

Sep08Sep09Sep10Sep11Sep12Sep13
Q1 11
Q2 00
Q3 11
Q4 00
Q5 00
Q6 00
Q7 00
Q8 00
Q9 01
F-score 23

Fifth Street Finance Corporation Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 0000000000
Q3 0011111100
Q4 0000000000
Q5 1000011000
Q6 0000000000
Q7 0000000000
Q8 0000000000
Q9 0000111000
F-score 2122344211
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