Switch to:
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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was $1,303 Mil.
Cash Flow from Operations was $2,337 Mil.
Revenue was $6,417 Mil.
Gross Profit was $5,448 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was (13632.1 + 16609.8) / 2 = $15120.95 Mil.
Total Assets at the begining of this year (Dec14) was $13,632 Mil.
Long-Term Debt was $70 Mil.
Total Current Assets was $2,256 Mil.
Total Current Liabilities was $3,706 Mil.
Net Income was $3,406 Mil.

Revenue was $6,022 Mil.
Gross Profit was $5,043 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was (8323 + 13632.1) / 2 = $10977.55 Mil.
Total Assets at the begining of last year (Dec13) was $8,323 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $5,183 Mil.
Total Current Liabilities was $3,022 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 1,303. ==> 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 2,337. ==> 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)
=1303.4/13632.1
=0.09561256

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=3405.5/8323
=0.40916737

Shire PLC's return on assets of this year was 0.09561256. Shire PLC's return on assets of last year was 0.40916737. ==> 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 1,303. Shire PLC's current cash flow from operations (TTM) was 2,337. ==> 2,337 > 1,303 ==> 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
=69.9/15120.95
=0.00462273

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=0/10977.55
=0

Shire PLC's gearing of this year was 0.00462273. Shire PLC'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: Dec15)=Total Current Assets/Total Current Liabilities
=2255.5/3706.1
=0.60859124

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=5183.1/3021.9
=1.71517919

Shire PLC's current ratio of this year was 0.60859124. Shire PLC's current ratio of last year was 1.71517919. ==> 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.

Shire PLC's number of shares in issue this year was 197.7. Shire PLC's number of shares in issue last year was 197.1. ==> 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
=5447.7/6416.7
=0.8489878

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5042.8/6022.1
=0.83738231

Shire PLC's gross margin of this year was 0.8489878. Shire PLC's gross margin of last year was 0.83738231. ==> 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 (Dec14)
=6416.7/13632.1
=0.47070517

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=6022.1/8323
=0.7235492

Shire PLC's asset turnover of this year was 0.47070517. Shire PLC's asset turnover of last year was 0.7235492. ==> 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+0+0+1+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
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK