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Five Star Quality Care Inc (NYSE:FVE)
Piotroski F-Score
0 (As of Today)

The zones of discrimination were as such:

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

Five Star Quality Care Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.

FVE' s 10-Year Piotroski F-Score Range
Min: 0   Max: 0
Current: 0


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 (Sep13) TTM:Last Year (Sep12) TTM:
Net Income was -0.198 + 0.798 + 2.14 + 1.946 = $5 Mil.
Cash Flow from Operations was 26.238 + 10.212 + 1.91 + 15.318 = $54 Mil.
Revenue was 324.112 + 323.261 + 323.6 + 322.185 = $1,293 Mil.
Gross Profit was 203.902 + 205.356 + 205.204 + 204.827 = $819 Mil.
Total Assets at the begining of this year (Sep12) was $564 Mil.
Total Assets was $573 Mil.
Long-Term Debt was $37 Mil.
Total Current Assets was $149 Mil.
Total Current Liabilities was $177 Mil.
Net Income was 16.213 + 4.91 + 0.472 + 61.987 = $84 Mil.

Revenue was 297.169 + 296.493 + 291.298 + 169.035 = $1,054 Mil.
Gross Profit was 205.343 + 206.598 + 203.633 + 171.8 = $787 Mil.
Total Assets at the begining of last year (Sep11) was $549 Mil.
Total Assets was $564 Mil.
Long-Term Debt was $63 Mil.
Total Current Assets was $128 Mil.
Total Current Liabilities was $158 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.

Five Star Quality Care Inc's current net income was 5. ==> 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.

Five Star Quality Care Inc's current cash flow from operations was 54. ==> 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 (Sep12)
=4.686/563.506
=0.00831579

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Sep11)
=83.582/549.079
=0.15222218

Five Star Quality Care Inc's return on assets of this year was 0.00831579. Five Star Quality Care Inc's return on assets of last year was 0.15222218. ==> 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.

Five Star Quality Care Inc's current net income was 5. Five Star Quality Care Inc's current cash flow from operations was 54. ==> 54 > 5 ==> 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
=36.758/572.725
=0.06418089

Gearing (Last Year)=Long-Term Debt/Total Assets
=62.772/563.506
=0.11139544

Five Star Quality Care Inc's gearing of this year was 0.06418089. Five Star Quality Care Inc's gearing of last year was 0.11139544. ==> 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
=148.678/176.652
=0.84164346

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=128.465/157.904
=0.81356394

Five Star Quality Care Inc's current ratio of this year was 0.84164346. Five Star Quality Care Inc's current ratio of last year was 0.81356394. ==> 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.

Five Star Quality Care Inc's number of shares in issue this year was 48.4. Five Star Quality Care Inc's number of shares in issue last year was 49.8. ==> 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
=819.289/1293.158
=0.63355677

Gross Margin (Last Year)=Gross Profit/Revenue
=787.374/1053.995
=0.7470377

Five Star Quality Care Inc's gross margin of this year was 0.63355677. Five Star Quality Care Inc's gross margin of last year was 0.7470377. ==> Last year's gross margin is higher ==> Score 0.

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 (Sep12)
=1293.158/563.506
=2.29484336

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Sep11)
=1053.995/549.079
=1.91956895

Five Star Quality Care Inc's asset turnover of this year was 2.29484336. Five Star Quality Care Inc's asset turnover of last year was 1.91956895. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+1+1+0+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Five Star Quality Care Inc 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.

Five Star Quality Care Inc Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Q1 00101111
Q2 00111111
Q3 00101010
Q4 10110101
Q5 00001101
Q6 01101000
Q7 00010000
Q8 00010100
Q9 01010010
F-score 12555544

Five Star Quality Care Inc Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13
Q1 1111111111
Q2 1111111111
Q3 1011110000
Q4 1100001111
Q5 1000111111
Q6 0000010111
Q7 0000001101
Q8 1100111100
Q9 0011000001
F-score 7555565667
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