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LinkedIn Corp (NYSE:LNKD)
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

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

LNKD' s 10-Year Piotroski F-Score Range
Min: 4   Max: 5
Current: 4

4
5

During the past 6 years, the highest Piotroski F-Score of LinkedIn Corp was 5. The lowest was 4. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was -13.445 + -1.034 + -4.263 + 2.995 = $-16 Mil.
Cash Flow from Operations was 128.858 + 128.436 + 181.226 + 130.431 = $569 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 this year (Dec13)
to the end of this year (Dec14) was
(3352.793 + 3561.869 + 3720.886 + 3906.012 + 5427.257) / 5 = $3993.7634 Mil.
Total Assets at the begining of this 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.
Net Income was 22.616 + 3.734 + -3.363 + 3.782 = $27 Mil.

Revenue was 324.705 + 363.661 + 392.96 + 447.219 = $1,529 Mil.
Gross Profit was 282.321 + 314.397 + 339.565 + 389.354 = $1,326 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(1382.33 + 1509.532 + 1687.96 + 3144.278 + 3352.793) / 5 = $2215.3786 Mil.
Total Assets at the begining of last year (Dec12) was $1,382 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $2,755 Mil.
Total Current Liabilities was $642 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 -16. ==> 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 569. ==> 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 (Dec13)
=-15.747/3352.793
=-0.00469668

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=26.769/1382.33
=0.01936513

LinkedIn Corp's return on assets of this year was -0.00469668. LinkedIn Corp's return on assets of last year was 0.01936513. ==> 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 -16. LinkedIn Corp's current cash flow from operations (TTM) was 569. ==> 569 > -16 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=1081.553/3993.7634
=0.27081048

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=0/2215.3786
=0

LinkedIn Corp's gearing of this year was 0.27081048. LinkedIn Corp's gearing of last year was 0. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=4122.1/882.785
=4.66942687

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=2755.47/641.991
=4.29206951

LinkedIn Corp's current ratio of this year was 4.66942687. LinkedIn Corp's current ratio of last year was 4.29206951. ==> This year's current ratio is higher. ==> Score 1.

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 124.6. LinkedIn Corp's number of shares in issue last year was 124.5. ==> 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
=1924.97/2218.767
=0.86758547

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1325.637/1528.545
=0.86725415

LinkedIn Corp's gross margin of this year was 0.86758547. LinkedIn Corp's gross margin of last year was 0.86725415. ==> This year's gross margin is higher. ==> Score 1.

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 (Dec13)
=2218.767/3352.793
=0.66176677

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=1528.545/1382.33
=1.10577431

LinkedIn Corp's asset turnover of this year was 0.66176677. LinkedIn Corp's asset turnover of last year was 1.10577431. ==> 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+0+1+0+1+0
=4

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

LinkedIn Corp 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.

LinkedIn Corp Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 10
Question 2 11
Question 3 00
Question 4 11
Question 5 10
Question 6 11
Question 7 00
Question 8 01
Question 9 00
F-score 54

LinkedIn Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 11110000
Question 2 11111111
Question 3 01000000
Question 4 11111111
Question 5 11111110
Question 6 00111101
Question 7 00000000
Question 8 11100001
Question 9 00000100
F-score 0556654534
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