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Fabrinet  (NYSE:FN) 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

Fabrinet has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NYSE:FN' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 7
Current: 5

3
7

During the past 12 years, the highest Piotroski F-Score of Fabrinet was 7. The lowest was 3. And the median was 5.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Fabrinet Annual Data

Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 7.00 5.00 5.00 5.00

Fabrinet Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.00 5.00 5.00 4.00 5.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

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 (Jun17) TTM:Last Year (Jun16) TTM:
Net Income was 22.766 + 25.292 + 21.656 + 27.401 = $97 Mil.
Cash Flow from Operations was -1.002 + 20.754 + 40.636 + 10.546 = $71 Mil.
Revenue was 332.043 + 351.156 + 366.837 + 370.454 = $1,420 Mil.
Gross Profit was 39.608 + 43.046 + 44.046 + 44.76 = $171 Mil.
Average Total Assets from the begining of this year (Jun16)
to the end of this year (Jun17) was
(855.857 + 901.303 + 945.919 + 1004.685 + 1033.075) / 5 = $948.1678 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $856 Mil.
Long-Term Debt & Capital Lease Obligation was $24 Mil.
Total Current Assets was $799 Mil.
Total Current Liabilities was $311 Mil.
Total Assets was 1.603 + 19.803 + 20.822 + 19.669 = $62 Mil.

Revenue was 216.433 + 233.038 + 250.888 + 276.388 = $977 Mil.
Gross Profit was 26.011 + 28.493 + 31.177 + 33.842 = $120 Mil.
Average Total Assets from the begining of last year (Jun15)
to the end of last year (Jun16) was
(672.503 + 688.2 + 723.586 + 768.53 + 855.857) / 5 = $741.7352 Mil.
Total Assets at the begining of last year (Jun15) was $673 Mil.
Long-Term Debt & Capital Lease Obligation was $36 Mil.
Total Current Assets was $673 Mil.
Total Current Liabilities was $256 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.

Fabrinet's current Net Income (TTM) was {NetIncome0_f}. ==> 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.

Fabrinet's current Cash Flow from Operations (TTM) was 71. ==> 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/Total Assets(Jun16)
=97.115/855.857
=0.11347106

ROA (Last Year)=Net Income/Total Assets(Jun15)
=61.897/672.503
=0.09203974

Fabrinet's return on assets of this year was 0.11347106. Fabrinet's return on assets of last year was 0.09203974. ==> This year is higher. ==> Score 1.

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.

Fabrinet's current Net Income (TTM) was 97. Fabrinet's current Cash Flow from Operations (TTM) was 71. ==> 71 <= 97 ==> CFROA <= ROA ==> Score 0.

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: Jun17)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jun16 to Jun17
=23.725/948.1678
=0.02502194

Gearing (Last Year: Jun16)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jun15 to Jun16
=36.1/741.7352
=0.04866966

Fabrinet's gearing of this year was 0.02502194. Fabrinet's gearing of last year was 0.04866966. ==> 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: Jun17)=Total Current Assets/Total Current Liabilities
=798.754/311.272
=2.56609653

Current Ratio (Last Year: Jun16)=Total Current Assets/Total Current Liabilities
=673.291/255.725
=2.63287125

Fabrinet's current ratio of this year was 2.56609653. Fabrinet's current ratio of last year was 2.63287125. ==> 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.

Fabrinet's number of shares in issue this year was 38.2. Fabrinet's number of shares in issue last year was 37.3. ==> 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
=171.46/1420.49
=0.12070483

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=119.523/976.747
=0.12236843

Fabrinet's gross margin of this year was 0.12070483. Fabrinet's gross margin of last year was 0.12236843. ==> 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/Total Assets at the Beginning of This Year (Jun16)
=1420.49/855.857
=1.6597282

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jun15)
=976.747/672.503
=1.45240542

Fabrinet's asset turnover of this year was 1.6597282. Fabrinet's asset turnover of last year was 1.45240542. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+0+1+0+0+0+1
=5

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

Fabrinet has an F-score of 5 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.


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