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Wright Medical Group Inc (NAS:WMGI)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 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

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

WMGI' s 10-Year Piotroski F-Score Range
Min: 2   Max: 7
Current: 2

2
7

During the past 13 years, the highest Piotroski F-Score of Wright Medical Group Inc was 7. The lowest was 2. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was -130.02 + -135.029 + -30.42 + -56.226 = $-351.7 Mil.
Cash Flow from Operations was -0.034 + -42.322 + -27.24 + -24.35 = $-93.9 Mil.
Revenue was 57.641 + 67.824 + 71.062 + 72.364 = $268.9 Mil.
Gross Profit was 43.604 + 50.401 + 53.645 + 52.358 = $200.0 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(1247.583 + 1058.626 + 1007.451 + 1023.849 + 999.892) / 5 = $1,067.5 Mil.
Total Assets was $999.9 Mil.
Long-Term Debt was $275.6 Mil.
Total Current Assets was $509.1 Mil.
Total Current Liabilities was $131.0 Mil.
Net Income was -5.339 + 5.352 + 8.435 + -17.331 = $-8.9 Mil.

Revenue was 50.888 + 58.38 + 56.293 + 60.572 = $226.1 Mil.
Gross Profit was 39.184 + 45.058 + 42.596 + 46.008 = $172.8 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(751.993 + 952.993 + 953.453 + 1215.747 + 1247.583) / 5 = $1,024.4 Mil.
Total Assets was $1,247.6 Mil.
Long-Term Debt was $262.8 Mil.
Total Current Assets was $622.9 Mil.
Total Current Liabilities was $170.7 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Wright Medical Group Inc's current net income (ttm) was -351.7. ==> Negative ==> Score 0.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Wright Medical Group Inc's current cash flow from operations (ttm) was -93.9. ==> Negative ==> Score 0.

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 (TTM)/Average Total Assets from Jun13 to Jun14
=-351.695/1067.4802
=-0.32946279

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=-8.883/1024.3538
=-0.00867181

Wright Medical Group Inc's return on assets of this year was -0.32946279. Wright Medical Group Inc's return on assets of last year was -0.00867181. ==> 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.

Wright Medical Group Inc's current net income (ttm) was -351.7. Wright Medical Group Inc's current cash flow from operations (ttm) was -93.9. ==> -93.9 > -351.7 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=275.606/999.892
=0.27563577

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=262.775/1247.583
=0.21062727

Wright Medical Group Inc's gearing of this year was 0.27563577. Wright Medical Group Inc's gearing of last year was 0.21062727. ==> Last year is lower than this year ==> Score 0.

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: Jun14)=Total Current Assets/Total Current Liabilities
=509.067/131.042
=3.88476214

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=622.923/170.687
=3.64950465

Wright Medical Group Inc's current ratio of this year was 3.88476214. Wright Medical Group Inc's current ratio of last year was 3.64950465. ==> This year's current ratio is higher. ==> Score 1.

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.

Wright Medical Group Inc's number of shares in issue this year was 49.6. Wright Medical Group Inc's number of shares in issue last year was 46.2. ==> 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: TTM)=Gross Profit/Revenue
=200.008/268.891
=0.74382557

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=172.846/226.133
=0.76435549

Wright Medical Group Inc's gross margin of this year was 0.74382557. Wright Medical Group Inc's gross margin of last year was 0.76435549. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=268.891/1067.4802
=0.2518932

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=226.133/1024.3538
=0.22075673

Wright Medical Group Inc's asset turnover of this year was 0.2518932. Wright Medical Group Inc's asset turnover of last year was 0.22075673. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+0+0+1+0+1+0+0+1
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

Wright Medical Group 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, Altman Z-Score, Beneish M-Score


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Wright Medical Group Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111010
Q2 1111011110
Q3 1000111010
Q4 1011011111
Q5 1110111101
Q6 1111010010
Q7 0100000000
Q8 0011000010
Q9 1001111001
F-score 7566476363

Wright Medical Group Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 0011100000
Q2 1111111000
Q3 0001110000
Q4 1111111111
Q5 1100101100
Q6 1111000011
Q7 0100000000
Q8 0011111100
Q9 0000000001
F-score 4556644322
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