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Nuance Communications Inc (NAS:NUAN)
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

Nuance Communications Inc has an F-score of 3 indicating the company's financial situation is typical for a stable company.

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

3
8

During the past 13 years, the highest Piotroski F-Score of Nuance Communications Inc was 8. 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 (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was -39.227 + -55.413 + -32.32 + -34.974 = $-162 Mil.
Cash Flow from Operations was 87.026 + 78.156 + 93.495 + 85.481 = $344 Mil.
Revenue was 475.653 + 469.98 + 472.243 + 469.769 = $1,888 Mil.
Gross Profit was 265.289 + 262.16 + 273.508 + 275.711 = $1,077 Mil.
Total Assets at the begining of this year (Mar13) was $6,091 Mil.
Total Assets was $6,012 Mil.
Long-Term Debt was $2,118 Mil.
Total Current Assets was $1,386 Mil.
Total Current Liabilities was $832 Mil.
Net Income was -25.848 + -22.096 + 117.641 + 79.264 = $149 Mil.

Revenue was 450.999 + 462.268 + 468.781 + 431.744 = $1,814 Mil.
Gross Profit was 259.814 + 279.696 + 297.296 + 273.844 = $1,111 Mil.
Total Assets at the begining of last year (Mar12) was $4,707 Mil.
Total Assets was $6,091 Mil.
Long-Term Debt was $2,337 Mil.
Total Current Assets was $1,569 Mil.
Total Current Liabilities was $568 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.

Nuance Communications Inc's current net income was -162. ==> 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.

Nuance Communications Inc's current cash flow from operations was 344. ==> 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 (Mar13)
=-161.934/6090.74
=-0.02658692

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=148.961/4707.234
=0.03164512

Nuance Communications Inc's return on assets of this year was -0.02658692. Nuance Communications Inc's return on assets of last year was 0.03164512. ==> 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.

Nuance Communications Inc's current net income was -162. Nuance Communications Inc's current cash flow from operations was 344. ==> 344 > -162 ==> 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)=Long-Term Debt/Total Assets
=2117.522/6011.666
=0.35223547

Gearing (Last Year)=Long-Term Debt/Total Assets
=2336.75/6090.74
=0.38365617

Nuance Communications Inc's gearing of this year was 0.35223547. Nuance Communications Inc's gearing of last year was 0.38365617. ==> 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)=Total Current Assets/Total Current Liabilities
=1385.778/832.34
=1.66491818

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1568.771/568.479
=2.75959358

Nuance Communications Inc's current ratio of this year was 1.66491818. Nuance Communications Inc's current ratio of last year was 2.75959358. ==> 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.

Nuance Communications Inc's number of shares in issue this year was 316.6. Nuance Communications Inc's number of shares in issue last year was 315.5. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=1076.668/1887.645
=0.57037632

Gross Margin (Last Year)=Gross Profit/Revenue
=1110.65/1813.792
=0.61233592

Nuance Communications Inc's gross margin of this year was 0.57037632. Nuance Communications Inc's gross margin of last year was 0.61233592. ==> 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 (Mar13)
=1887.645/6090.74
=0.30992047

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=1813.792/4707.234
=0.38532013

Nuance Communications Inc's asset turnover of this year was 0.30992047. Nuance Communications Inc's asset turnover of last year was 0.38532013. ==> 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+1+0+0+0+0
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

Nuance Communications Inc 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.

Nuance Communications Inc Annual Data

Dec03Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Q1 0000000110
Q2 1111111111
Q3 0101011110
Q4 1111111111
Q5 1000111100
Q6 1011011000
Q7 0000000001
Q8 0000001010
Q9 1000000110
F-score 5334356663

Nuance Communications Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111000
Q2 1111111111
Q3 1111110000
Q4 1111111111
Q5 0100000011
Q6 0000111000
Q7 0001111100
Q8 0111100000
Q9 1111111000
F-score 5767876333
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