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LinkedIn Corp (NYSE:LNKD)
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

LinkedIn Corp has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

LNKD' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 5
Current: 3

3
5

During the past 7 years, the highest Piotroski F-Score of LinkedIn Corp was 5. The lowest was 3. 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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was -42.548 + -67.748 + -40.523 + -15.325 = $-166 Mil.
Cash Flow from Operations was 165.132 + 225.642 + 239.595 + 176.606 = $807 Mil.
Revenue was 637.687 + 711.735 + 779.595 + 861.894 = $2,991 Mil.
Gross Profit was 549.281 + 611.649 + 668.227 + 742.896 = $2,572 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(5427.257 + 5538.164 + 6556.782 + 6716.71 + 7011.199) / 5 = $6250.0224 Mil.
Total Assets at the begining of this year (Dec14) was $5,427 Mil.
Long-Term Debt was $1,127 Mil.
Total Current Assets was $3,935 Mil.
Total Current Liabilities was $1,188 Mil.
Net Income was -13.445 + -1.034 + -4.263 + 2.995 = $-16 Mil.

Revenue was 473.193 + 533.877 + 568.265 + 643.432 = $2,219 Mil.
Gross Profit was 410.738 + 464.341 + 493.361 + 556.53 = $1,925 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(3352.793 + 3561.869 + 3720.886 + 3906.012 + 5427.257) / 5 = $3993.7634 Mil.
Total Assets at the begining of last year (Dec13) was $3,353 Mil.
Long-Term Debt was $1,082 Mil.
Total Current Assets was $4,122 Mil.
Total Current Liabilities was $883 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.

LinkedIn Corp's current net income (TTM) was -166. ==> 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.

LinkedIn Corp's current cash flow from operations (TTM) was 807. ==> 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 (Dec14)
=-166.144/5427.257
=-0.03061289

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=-15.747/3352.793
=-0.00469668

LinkedIn Corp's return on assets of this year was -0.03061289. LinkedIn Corp's return on assets of last year was -0.00469668. ==> 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.

LinkedIn Corp's current net income (TTM) was -166. LinkedIn Corp's current cash flow from operations (TTM) was 807. ==> 807 > -166 ==> 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=1126.534/6250.0224
=0.18024479

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=1081.553/3993.7634
=0.27081048

LinkedIn Corp's gearing of this year was 0.18024479. LinkedIn Corp's gearing of last year was 0.27081048. ==> This year is lower or equal to last year. ==> Score 1.

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: Dec15)=Total Current Assets/Total Current Liabilities
=3935.089/1188.084
=3.31213029

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=4122.1/882.785
=4.66942687

LinkedIn Corp's current ratio of this year was 3.31213029. LinkedIn Corp's current ratio of last year was 4.66942687. ==> 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.

LinkedIn Corp's number of shares in issue this year was 129. LinkedIn Corp's number of shares in issue last year was 122.8. ==> 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
=2572.053/2990.911
=0.85995638

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1924.97/2218.767
=0.86758547

LinkedIn Corp's gross margin of this year was 0.85995638. LinkedIn Corp's gross margin of last year was 0.86758547. ==> 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 (Dec14)
=2990.911/5427.257
=0.55109073

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=2218.767/3352.793
=0.66176677

LinkedIn Corp's asset turnover of this year was 0.55109073. LinkedIn Corp's asset turnover of last year was 0.66176677. ==> Last year's asset turnover is higher ==> Score 0.

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+1+0+0+0+0
=3

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

LinkedIn Corp 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.

LinkedIn Corp Annual Data

Dec12Dec13Dec14Dec15
Question 1 1100
Question 2 1111
Question 3 0000
Question 4 1111
Question 5 1101
Question 6 0110
Question 7 0000
Question 8 1010
Question 9 0000
F-score 5543

LinkedIn Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1100000000
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 1111100001
Question 6 1111011000
Question 7 0000000000
Question 8 1000010000
Question 9 0001000010
F-score 6545343233
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