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Shire PLC (NAS:SHPG)
Piotroski F-Score
5 (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

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

SHPG' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of Shire PLC was 8. The lowest was 3. And the median was 6.


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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 280.6 + 419 + -162.1 + -386.8 = $151 Mil.
Cash Flow from Operations was 761.8 + 389.5 + 590.9 + 525.6 = $2,268 Mil.
Revenue was 1715.7 + 1709.3 + 2429.1 + 3452.1 = $9,306 Mil.
Gross Profit was 1465.2 + 1460.7 + 1651 + 1715.9 = $6,293 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(17453.6 + 16609.8 + 24055.3 + 70720.5 + 69751.3) / 5 = $39718.1 Mil.
Total Assets at the begining of this year (Sep15) was $17,454 Mil.
Long-Term Debt was $20,989 Mil.
Total Current Assets was $8,905 Mil.
Total Current Liabilities was $7,111 Mil.
Net Income was 2172.3 + 410.4 + 159.6 + 452.8 = $3,195 Mil.

Revenue was 1576.1 + 1488.4 + 1557.6 + 1655 = $6,277 Mil.
Gross Profit was 1357.6 + 1260.6 + 1329.6 + 1392.3 = $5,340 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(11540.5 + 13632.1 + 17678.3 + 17030.5 + 17453.6) / 5 = $15467 Mil.
Total Assets at the begining of last year (Sep14) was $11,541 Mil.
Long-Term Debt was $71 Mil.
Total Current Assets was $2,706 Mil.
Total Current Liabilities was $4,265 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.

Shire PLC's current net income (TTM) was 151. ==> 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.

Shire PLC's current cash flow from operations (TTM) was 2,268. ==> 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 (Sep15)
=150.7/17453.6
=0.00863432

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=3195.1/11540.5
=0.27685975

Shire PLC's return on assets of this year was 0.00863432. Shire PLC's return on assets of last year was 0.27685975. ==> 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.

Shire PLC's current net income (TTM) was 151. Shire PLC's current cash flow from operations (TTM) was 2,268. ==> 2,268 > 151 ==> 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=20988.9/39718.1
=0.52844673

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=70.7/15467
=0.00457102

Shire PLC's gearing of this year was 0.52844673. Shire PLC's gearing of last year was 0.00457102. ==> 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: Sep16)=Total Current Assets/Total Current Liabilities
=8904.5/7110.9
=1.25223249

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=2706.1/4264.5
=0.63456443

Shire PLC's current ratio of this year was 1.25223249. Shire PLC's current ratio of last year was 0.63456443. ==> 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.

Shire PLC's number of shares in issue this year was 300.1. Shire PLC's number of shares in issue last year was 197.8. ==> 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
=6292.8/9306.2
=0.67619437

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5340.1/6277.1
=0.85072725

Shire PLC's gross margin of this year was 0.67619437. Shire PLC's gross margin of last year was 0.85072725. ==> 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 (Sep15)
=9306.2/17453.6
=0.53319659

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=6277.1/11540.5
=0.54391924

Shire PLC's asset turnover of this year was 0.53319659. Shire PLC's asset turnover of last year was 0.54391924. ==> 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
=1+1+0+1+0+1+0+0+0
=4

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

Shire PLC 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 local exchange's currency.

Shire PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1011111111
Question 2 1111111111
Question 3 1011110010
Question 4 1111111111
Question 5 1011110110
Question 6 0001001100
Question 7 0000010100
Question 8 0101011001
Question 9 1101010010
F-score 6458585664

Shire PLC Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 1111110000
Question 4 1111111111
Question 5 0011110000
Question 6 0100000111
Question 7 0000000000
Question 8 0000111100
Question 9 1110000000
F-score 5665664544
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