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Shire PLC (NAS:SHPG)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Shire PLC has an F-score of 6 indicating the company's financial situation is typical for a stable company.

SHPG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 6

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 own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 230.4 + 64 + 278.2 + 258.1 = $831 Mil.
Cash Flow from Operations was 246.1 + 610.3 + 433.7 + 258.6 = $1,549 Mil.
Revenue was 1346.8 + 1261.3 + 1236.6 + 1274.5 = $5,119 Mil.
Gross Profit was 1117.3 + 1119.2 + 1039.5 + 1098.8 = $4,375 Mil.
Total Assets at the begining of this year (Mar13) was $7,586 Mil.
Total Assets was $10,900 Mil.
Long-Term Debt was $850 Mil.
Total Current Assets was $2,641 Mil.
Total Current Liabilities was $2,520 Mil.
Net Income was 64.8 + 42 + 227.2 + 237.8 = $572 Mil.

Revenue was 1143.4 + 1047.4 + 1100.4 + 1207.8 = $4,499 Mil.
Gross Profit was 996 + 940.4 + 932.5 + 1055.3 = $3,924 Mil.
Total Assets at the begining of last year (Mar12) was $6,718 Mil.
Total Assets was $7,586 Mil.
Long-Term Debt was $1,100 Mil.
Total Current Assets was $3,333 Mil.
Total Current Liabilities was $1,620 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.

Shire PLC's current net income was 831. ==> Positive ==> Score 1.

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.

Shire PLC's current cash flow from operations was 1,549. ==> 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)
=830.7/7585.6
=0.10951012

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=571.8/6718.3
=0.08511082

Shire PLC's return on assets of this year was 0.10951012. Shire PLC's return on assets of last year was 0.08511082. ==> This year is higher. ==> Score 1.

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.

Shire PLC's current net income was 831. Shire PLC's current cash flow from operations was 1,549. ==> 1,549 > 831 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=850/10900.2
=0.07798022

Gearing (Last Year)=Long-Term Debt/Total Assets
=1100/7585.6
=0.1450116

Shire PLC's gearing of this year was 0.07798022. Shire PLC's gearing of last year was 0.1450116. ==> This year is lower. ==> 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
=2641.2/2519.6
=1.04826163

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=3333.3/1619.7
=2.0579737

Shire PLC's current ratio of this year was 1.04826163. Shire PLC's current ratio of last year was 2.0579737. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Shire PLC's number of shares in issue this year was 194.8. Shire PLC's number of shares in issue last year was 185.1. ==> There is more 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
=4374.8/5119.2
=0.85458665

Gross Margin (Last Year)=Gross Profit/Revenue
=3924.2/4499
=0.87223828

Shire PLC's gross margin of this year was 0.85458665. Shire PLC's gross margin of last year was 0.87223828. ==> 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)
=5119.2/7585.6
=0.67485762

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=4499/6718.3
=0.66966346

Shire PLC's asset turnover of this year was 0.67485762. Shire PLC's asset turnover of last year was 0.66966346. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+0+0+0+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Shire PLC has an F-score of 6 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.

Shire PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1010111111
Q2 1111111111
Q3 0010111100
Q4 1111111111
Q5 1100011101
Q6 0000010011
Q7 1100000011
Q8 1001010010
Q9 0111010100
F-score 6554485666

Shire PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 1110000011
Q4 1111111111
Q5 1000111110
Q6 1111100100
Q7 0111111000
Q8 0011111000
Q9 1000000011
F-score 7676766560
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