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

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Five Star Quality Care Inc has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

FVE' s 10-Year Piotroski F-Score Range
Min: 2   Max: 7
Current: 3

2
7

During the past 13 years, the highest Piotroski F-Score of Five Star Quality Care Inc was 7. The lowest was 2. 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 (Mar15) TTM:Last Year (Mar14) TTM:
Net Income was -1.891 + -3.008 + -73.748 + -5.302 = $-84 Mil.
Cash Flow from Operations was 26.042 + -6.741 + -5.946 + 15.988 = $29 Mil.
Revenue was 332.799 + 334.339 + 332.526 + 333.973 = $1,334 Mil.
Gross Profit was 207.487 + 208.632 + 199.028 + 205.471 = $821 Mil.
Average Total Assets from the begining of this year (Mar14)
to the end of this year (Mar15) was
(570.364 + 605.561 + 603.888 + 534.973 + 530.562) / 5 = $569.0696 Mil.
Total Assets at the begining of this year (Mar14) was $570 Mil.
Long-Term Debt was $49 Mil.
Total Current Assets was $122 Mil.
Total Current Liabilities was $220 Mil.
Net Income was 0.798 + -0.758 + -5.43 + -6.759 = $-12 Mil.

Revenue was 323.261 + 324.263 + 325.225 + 328.411 = $1,301 Mil.
Gross Profit was 205.356 + 204.115 + 203.853 + 201.389 = $815 Mil.
Average Total Assets from the begining of last year (Mar13)
to the end of last year (Mar14) was
(578.652 + 568.263 + 572.725 + 590.183 + 570.364) / 5 = $576.0374 Mil.
Total Assets at the begining of last year (Mar13) was $579 Mil.
Long-Term Debt was $36 Mil.
Total Current Assets was $133 Mil.
Total Current Liabilities was $189 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.

Five Star Quality Care Inc's current net income (TTM) was -84. ==> Negative ==> Score 0.

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.

Five Star Quality Care Inc's current cash flow from operations (TTM) was 29. ==> 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 (Mar14)
=-83.949/570.364
=-0.14718496

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=-12.149/578.652
=-0.02099535

Five Star Quality Care Inc's return on assets of this year was -0.14718496. Five Star Quality Care Inc's return on assets of last year was -0.02099535. ==> Last year is higher ==> Score 0.

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.

Five Star Quality Care Inc's current net income (TTM) was -84. Five Star Quality Care Inc's current cash flow from operations (TTM) was 29. ==> 29 > -84 ==> 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: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=48.911/569.0696
=0.08594906

Gearing (Last Year: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=36.16/576.0374
=0.0627737

Five Star Quality Care Inc's gearing of this year was 0.08594906. Five Star Quality Care Inc's gearing of last year was 0.0627737. ==> Last year is lower than this year ==> Score 0.

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: Mar15)=Total Current Assets/Total Current Liabilities
=122.164/219.517
=0.55651271

Current Ratio (Last Year: Mar14)=Total Current Assets/Total Current Liabilities
=133.493/189.161
=0.70571101

Five Star Quality Care Inc's current ratio of this year was 0.55651271. Five Star Quality Care Inc's current ratio of last year was 0.70571101. ==> Last year's current ratio is higher ==> Score 0.

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.

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 48. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=820.618/1333.637
=0.61532336

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=814.713/1301.16
=0.62614359

Five Star Quality Care Inc's gross margin of this year was 0.61532336. Five Star Quality Care Inc's gross margin of last year was 0.62614359. ==> Last year's gross margin is higher ==> Score 0.

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 (Mar14)
=1333.637/570.364
=2.33822086

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=1301.16/578.652
=2.24860538

Five Star Quality Care Inc's asset turnover of this year was 2.33822086. Five Star Quality Care Inc's asset turnover of last year was 2.24860538. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

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

Five Star Quality Care Inc has an F-score of 3. 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


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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 0010111100
Question 2 0011111111
Question 3 0010101000
Question 4 1011010111
Question 5 1010110110
Question 6 0110100000
Question 7 0001000011
Question 8 0001010000
Question 9 0101001011
F-score 2265554454

Five Star Quality Care Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111000000
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 1111110000
Question 6 0111000000
Question 7 1101011110
Question 8 1100000000
Question 9 0001111111
F-score 6757454443
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