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Layne Christensen Company (NAS:LAYN)
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 = 8 or 9
Bad or low score = 0 or 1

Layne Christensen Company has an F-score of 3 indicating the company's financial situation is typical for a stable company.

LAYN' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 3

2
8

During the past 13 years, the highest Piotroski F-Score of Layne Christensen Company was 8. 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 (Oct13) TTM:Last Year (Oct12) TTM:
Net Income was -15.772 + -74.82 + -23.779 + -24.852 = $-139 Mil.
Cash Flow from Operations was 1.843 + -15.793 + 10.8 + 25.543 = $22 Mil.
Revenue was 216.462 + 232.015 + 226.446 + 234.606 = $910 Mil.
Gross Profit was 39.554 + 39.891 + 36.891 + 32.481 = $149 Mil.
Total Assets at the begining of this year (Oct12) was $839 Mil.
Total Assets was $685 Mil.
Long-Term Debt was $103 Mil.
Total Current Assets was $336 Mil.
Total Current Liabilities was $225 Mil.
Net Income was 8.476 + -24.025 + 3.749 + -88.504 = $-100 Mil.

Revenue was 281.281 + 287.972 + 271.765 + 271.924 = $1,113 Mil.
Gross Profit was 56.923 + 57.901 + 52.88 + 54.002 = $222 Mil.
Total Assets at the begining of last year (Oct11) was $899 Mil.
Total Assets was $839 Mil.
Long-Term Debt was $118 Mil.
Total Current Assets was $429 Mil.
Total Current Liabilities was $238 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.

Layne Christensen Company's current net income was -139. ==> 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.

Layne Christensen Company's current cash flow from operations was 22. ==> 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 (Oct12)
=-139.223/838.862
=-0.16596651

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Oct11)
=-100.304/899.02
=-0.11157038

Layne Christensen Company's return on assets of this year was -0.16596651. Layne Christensen Company's return on assets of last year was -0.11157038. ==> 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.

Layne Christensen Company's current net income was -139. Layne Christensen Company's current cash flow from operations was 22. ==> 22 > -139 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=102.743/684.94
=0.15000292

Gearing (Last Year)=Long-Term Debt/Total Assets
=118.34/838.862
=0.14107207

Layne Christensen Company's gearing of this year was 0.15000292. Layne Christensen Company's gearing of last year was 0.14107207. ==> Last year is lower ==> 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)=Total Current Assets/Total Current Liabilities
=336.318/225.147
=1.49377074

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=428.902/238.031
=1.80187455

Layne Christensen Company's current ratio of this year was 1.49377074. Layne Christensen Company's current ratio of last year was 1.80187455. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Layne Christensen Company's number of shares in issue this year was 19.6. Layne Christensen Company's number of shares in issue last year was 19.8. ==> There is the same number of shares in issue this year, or fewer. ==> 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
=148.817/909.529
=0.16361985

Gross Margin (Last Year)=Gross Profit/Revenue
=221.706/1112.942
=0.19920715

Layne Christensen Company's gross margin of this year was 0.16361985. Layne Christensen Company's gross margin of last year was 0.19920715. ==> 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 (Oct12)
=909.529/838.862
=1.08424151

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Oct11)
=1112.942/899.02
=1.23795021

Layne Christensen Company's asset turnover of this year was 1.08424151. Layne Christensen Company's asset turnover of last year was 1.23795021. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+1+0+1+0+0+1+0+0
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

Layne Christensen Company has an F-score of 3 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.

Layne Christensen Company Annual Data

Jan04Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13
Q1 1111111
Q2 1111111
Q3 1110100
Q4 1111111
Q5 0001111
Q6 1100100
Q7 0000000
Q8 0001100
Q9 1110000
F-score 6655744

Layne Christensen Company Quarterly Data

Jul11Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13
Q1 1100000000
Q2 1111111111
Q3 1100001000
Q4 0011111111
Q5 0000000000
Q6 1111110000
Q7 0010100101
Q8 0000000000
Q9 1010000000
F-score 5453433323
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