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PMC-Sierra Inc (NAS:PMCS)
Piotroski F-Score
0 (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

PMC-Sierra Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 2.33 + 4.655 + -8.579 + 6.718 = $5.1 Mil.
Cash Flow from Operations was 29.103 + 8.035 + 33.384 + 15.372 = $85.9 Mil.
Revenue was 136.851 + 133.071 + 124.767 + 133.574 = $528.3 Mil.
Gross Profit was 96.149 + 93.091 + 86.333 + 95.575 = $371.1 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(833.805 + 869.085 + 824.556 + 824.55 + 821.504) / 5 = $834.7 Mil.
Total Assets at the begining of this year (Sep14) was $833.8 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $229.0 Mil.
Total Current Liabilities was $130.3 Mil.
Net Income was -15.679 + -4.241 + -3.48 + 5.473 = $-17.9 Mil.

Revenue was 126.872 + 126.468 + 126.822 + 135.462 = $515.6 Mil.
Gross Profit was 89.523 + 88.904 + 89.998 + 95.156 = $363.6 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(880.435 + 849.951 + 770.649 + 781.53 + 833.805) / 5 = $823.274 Mil.
Total Assets at the begining of last year (Sep13) was $880.4 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $243.0 Mil.
Total Current Liabilities was $121.3 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.

PMC-Sierra Inc's current net income (TTM) was 5.1. ==> Positive ==> Score 1.

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.

PMC-Sierra Inc's current cash flow from operations (TTM) was 85.9. ==> 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 (Sep14)
=5.124/833.805
=0.00614532

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=-17.927/880.435
=-0.02036153

PMC-Sierra Inc's return on assets of this year was 0.00614532. PMC-Sierra Inc's return on assets of last year was -0.02036153. ==> This year is higher. ==> Score 1.

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.

PMC-Sierra Inc's current net income (TTM) was 5.1. PMC-Sierra Inc's current cash flow from operations (TTM) was 85.9. ==> 85.9 > 5.1 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=0/834.7
=0

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=0/823.274
=0

PMC-Sierra Inc's gearing of this year was 0. PMC-Sierra Inc's gearing of last year was 0. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=228.97/130.252
=1.75790007

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=243.014/121.339
=2.0027691

PMC-Sierra Inc's current ratio of this year was 1.75790007. PMC-Sierra Inc's current ratio of last year was 2.0027691. ==> 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.

PMC-Sierra Inc's number of shares in issue this year was 196.9. PMC-Sierra Inc's number of shares in issue last year was 200.7. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=371.148/528.263
=0.70258186

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=363.581/515.624
=0.70512816

PMC-Sierra Inc's gross margin of this year was 0.70258186. PMC-Sierra Inc's gross margin of last year was 0.70512816. ==> 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 (Sep14)
=528.263/833.805
=0.63355701

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=515.624/880.435
=0.58564687

PMC-Sierra Inc's asset turnover of this year was 0.63355701. PMC-Sierra Inc's asset turnover of last year was 0.58564687. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+1+0+1+0+1
=7

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

PMC-Sierra Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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.

PMC-Sierra Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1001111001
Question 2 1111111111
Question 3 0011010011
Question 4 1110111111
Question 5 0111011111
Question 6 1011001101
Question 7 0000001110
Question 8 1001110110
Question 9 1101110011
F-score 6457576677

PMC-Sierra Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 0100001111
Question 2 1111111111
Question 3 0111101111
Question 4 1111111111
Question 5 0110111111
Question 6 1101111100
Question 7 1111110011
Question 8 1111100000
Question 9 0111111111
F-score 5977867777
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