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GuruFocus has detected 4 Warning Signs with AbbVie Inc $ABBV.
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AbbVie Inc (NYSE:ABBV)
Piotroski F-Score
6 (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

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

ABBV' s Piotroski F-Score Range Over the Past 10 Years
Min: 5   Max: 7
Current: 6

5
7

During the past 8 years, the highest Piotroski F-Score of AbbVie Inc was 7. The lowest was 5. 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 (Mar17) TTM:Last Year (Mar16) TTM:
Net Income was 1610 + 1598 + 1391 + 1711 = $6,310 Mil.
Cash Flow from Operations was 1918 + 1454 + 1541 + 2102 = $7,015 Mil.
Revenue was 6452 + 6432 + 6796 + 6538 = $26,218 Mil.
Gross Profit was 5047 + 4928 + 5241 + 4922 = $20,138 Mil.
Average Total Assets from the begining of this year (Mar16)
to the end of this year (Mar17) was
(53720 + 67211 + 66626 + 66099 + 65664) / 5 = $63864 Mil.
Total Assets at the begining of this year (Mar16) was $53,720 Mil.
Long-Term Debt was $36,526 Mil.
Total Current Assets was $15,547 Mil.
Total Current Liabilities was $8,844 Mil.
Net Income was 1366 + 1239 + 1517 + 1354 = $5,476 Mil.

Revenue was 5475 + 5944 + 6400 + 5958 = $23,777 Mil.
Gross Profit was 4559 + 4777 + 4925 + 4589 = $18,850 Mil.
Average Total Assets from the begining of last year (Mar15)
to the end of last year (Mar16) was
(26699 + 53855 + 54832 + 53050 + 53720) / 5 = $48431.2 Mil.
Total Assets at the begining of last year (Mar15) was $26,699 Mil.
Long-Term Debt was $29,490 Mil.
Total Current Assets was $16,622 Mil.
Total Current Liabilities was $10,662 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.

AbbVie Inc's current net income (TTM) was 6,310. ==> 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.

AbbVie Inc's current cash flow from operations (TTM) was 7,015. ==> 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.

AbbVie Inc's return on assets of this year was 0.11746091. AbbVie Inc's return on assets of last year was 0.20510131. ==> 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.

AbbVie Inc's current net income (TTM) was 6,310. AbbVie Inc's current cash flow from operations (TTM) was 7,015. ==> 7,015 > 6,310 ==> 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: Mar17)=Long-Term Debt/Average Total Assets from Mar16 to Mar17
=36526/63864
=0.57193411

Gearing (Last Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=29490/48431.2
=0.608905

AbbVie Inc's gearing of this year was 0.57193411. AbbVie Inc's gearing of last year was 0.608905. ==> 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: Mar17)=Total Current Assets/Total Current Liabilities
=15547/8844
=1.75791497

Current Ratio (Last Year: Mar16)=Total Current Assets/Total Current Liabilities
=16622/10662
=1.55899456

AbbVie Inc's current ratio of this year was 1.75791497. AbbVie Inc's current ratio of last year was 1.55899456. ==> 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.

AbbVie Inc's number of shares in issue this year was 1603. AbbVie Inc's number of shares in issue last year was 1625. ==> 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
=20138/26218
=0.76809825

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=18850/23777
=0.79278294

AbbVie Inc's gross margin of this year was 0.76809825. AbbVie Inc's gross margin of last year was 0.79278294. ==> 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 (Mar16)
=26218/53720
=0.48804914

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=23777/26699
=0.8905577

AbbVie Inc's asset turnover of this year was 0.48804914. AbbVie Inc's asset turnover of last year was 0.8905577. ==> 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+1+1+1+0+0
=6

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

AbbVie Inc 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 local exchange's currency.

AbbVie Inc Annual Data

Dec13Dec14Dec15Dec16
Question 1 1111
Question 2 1111
Question 3 0010
Question 4 1111
Question 5 1101
Question 6 1011
Question 7 0001
Question 8 1110
Question 9 0010
F-score 6576

AbbVie Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Question 1 1111111111
Question 2 1111111111
Question 3 0000111100
Question 4 1111111111
Question 5 1100001111
Question 6 0000111011
Question 7 0100001111
Question 8 1111110000
Question 9 0111110000
F-score 5755777666
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