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Genomic Health Inc (NAS:GHDX)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

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

Genomic Health Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

GHDX' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 4

3
8

During the past 13 years, the highest Piotroski F-Score of Genomic Health Inc was 8. The lowest was 3. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was -9.369 + -7.445 + -4.618 + -6.262 = $-27.7 Mil.
Cash Flow from Operations was -4.197 + 0.126 + 1.974 + 0.505 = $-1.6 Mil.
Revenue was 68.819 + 67.002 + 70.477 + 69.101 = $275.4 Mil.
Gross Profit was 58.004 + 54.947 + 58.27 + 57.122 = $228.3 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(176.7 + 177.034 + 173.337 + 177.95 + 179.345) / 5 = $176.8732 Mil.
Total Assets at the begining of this year (Sep13) was $176.7 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $145.2 Mil.
Total Current Liabilities was $33.6 Mil.
Net Income was 1.959 + -0.883 + -2.994 + 0.488 = $-1.4 Mil.

Revenue was 60.427 + 63.094 + 63.691 + 65.99 = $253.2 Mil.
Gross Profit was 50.786 + 53.348 + 52.934 + 55.209 = $212.3 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(173.173 + 153.734 + 157 + 167.657 + 176.7) / 5 = $165.6528 Mil.
Total Assets at the begining of last year (Sep12) was $173.2 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $149.0 Mil.
Total Current Liabilities was $28.9 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.

Genomic Health Inc's current net income (TTM) was -27.7. ==> Negative ==> Score 0.

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.

Genomic Health Inc's current cash flow from operations (TTM) was -1.6. ==> 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)/Total Assets at the Beginning of This Year (Sep13)
=-27.694/176.7
=-0.15672892

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=-1.43/173.173
=-0.00825764

Genomic Health Inc's return on assets of this year was -0.15672892. Genomic Health Inc's return on assets of last year was -0.00825764. ==> 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.

Genomic Health Inc's current net income (TTM) was -27.7. Genomic Health Inc's current cash flow from operations (TTM) was -1.6. ==> -1.6 > -27.7 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=0/176.8732
=0

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=0/165.6528
=0

Genomic Health Inc's gearing of this year was 0. Genomic Health Inc's gearing of last year was 0. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=145.208/33.587
=4.32333939

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=148.954/28.931
=5.14859493

Genomic Health Inc's current ratio of this year was 4.32333939. Genomic Health Inc's current ratio of last year was 5.14859493. ==> 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.

Genomic Health Inc's number of shares in issue this year was 31.6. Genomic Health Inc's number of shares in issue last year was 32.3. ==> 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: TTM)=Gross Profit/Revenue
=228.343/275.399
=0.82913518

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=212.277/253.202
=0.83837016

Genomic Health Inc's gross margin of this year was 0.82913518. Genomic Health Inc's gross margin of last year was 0.83837016. ==> 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 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 (Sep13)
=275.399/176.7
=1.55856819

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=253.202/173.173
=1.46213324

Genomic Health Inc's asset turnover of this year was 1.55856819. Genomic Health Inc's asset turnover of last year was 1.46213324. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+0+0+1+1+0+1+0+1
=4

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

Genomic Health Inc has an F-score of 4 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.

Genomic Health Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 000001110
Q2 000011111
Q3 110111100
Q4 111111111
Q5 001111111
Q6 001001110
Q7 000000001
Q8 111111110
Q9 111111001
F-score 445568765

Genomic Health Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111100000
Q2 1111111110
Q3 0000000000
Q4 1111111111
Q5 1111111111
Q6 1110000000
Q7 0001111001
Q8 1111000000
Q9 0000001111
F-score 6666545444
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