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GuruFocus has detected 5 Warning Signs with Mylan NV $MYL.
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Mylan NV (NAS:MYL)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Mylan NV has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

MYL' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 3

2
8

During the past 13 years, the highest Piotroski F-Score of Mylan NV was 8. 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 local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Net Income was 13.9 + 168.4 + -119.8 + 417.5 = $480 Mil.
Cash Flow from Operations was 80.5 + 416.6 + 1200.6 + 349.5 = $2,047 Mil.
Revenue was 2191.3 + 2560.7 + 3057.1 + 3267.8 = $11,077 Mil.
Gross Profit was 907 + 1171.7 + 1283.3 + 1335 = $4,697 Mil.
Average Total Assets from the begining of this year (Dec15)
to the end of this year (Dec16) was
(22267.7 + 22644.1 + 28836.3 + 36538.5 + 34726.2) / 5 = $29002.56 Mil.
Total Assets at the begining of this year (Dec15) was $22,268 Mil.
Long-Term Debt was $15,203 Mil.
Total Current Assets was $7,523 Mil.
Total Current Liabilities was $5,041 Mil.
Net Income was 56.6 + 167.8 + 428.6 + 194.6 = $848 Mil.

Revenue was 1871.7 + 2371.7 + 2695.2 + 2490.7 = $9,429 Mil.
Gross Profit was 830.1 + 1008.1 + 1315.3 + 1062.6 = $4,216 Mil.
Average Total Assets from the begining of last year (Dec14)
to the end of last year (Dec15) was
(15820.5 + 22123.8 + 22794.6 + 21316.5 + 22267.7) / 5 = $20864.62 Mil.
Total Assets at the begining of last year (Dec14) was $15,821 Mil.
Long-Term Debt was $6,296 Mil.
Total Current Assets was $6,473 Mil.
Total Current Liabilities was $4,122 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.

Mylan NV's current net income (TTM) was 480. ==> 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.

Mylan NV's current cash flow from operations (TTM) was 2,047. ==> 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 (Dec15)
=480/22267.7
=0.02155589

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=847.6/15820.5
=0.05357606

Mylan NV's return on assets of this year was 0.02155589. Mylan NV's return on assets of last year was 0.05357606. ==> 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.

Mylan NV's current net income (TTM) was 480. Mylan NV's current cash flow from operations (TTM) was 2,047. ==> 2,047 > 480 ==> 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: Dec16)=Long-Term Debt/Average Total Assets from Dec15 to Dec16
=15202.9/29002.56
=0.52419166

Gearing (Last Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=6295.6/20864.62
=0.30173567

Mylan NV's gearing of this year was 0.52419166. Mylan NV's gearing of last year was 0.30173567. ==> 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: Dec16)=Total Current Assets/Total Current Liabilities
=7522.5/5040.7
=1.49235225

Current Ratio (Last Year: Dec15)=Total Current Assets/Total Current Liabilities
=6472.7/4122.2
=1.57020523

Mylan NV's current ratio of this year was 1.49235225. Mylan NV's current ratio of last year was 1.57020523. ==> 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.

Mylan NV's number of shares in issue this year was 536.4. Mylan NV's number of shares in issue last year was 510. ==> 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
=4697/11076.9
=0.42403561

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=4216.1/9429.3
=0.44712757

Mylan NV's gross margin of this year was 0.42403561. Mylan NV's gross margin of last year was 0.44712757. ==> 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 (Dec15)
=11076.9/22267.7
=0.49744248

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=9429.3/15820.5
=0.59601782

Mylan NV's asset turnover of this year was 0.49744248. Mylan NV's asset turnover of last year was 0.59601782. ==> 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+0+0
=3

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

Mylan NV has an F-score of 3. It is a bad or low score, which usually implies poor business operation.


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.

Mylan NV Annual Data

Mar07Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 11111111
Question 2 11111111
Question 3 11110100
Question 4 11111111
Question 5 01100110
Question 6 01010010
Question 7 00011000
Question 8 10111100
Question 9 11110010
F-score 67785663

Mylan NV Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Question 1 1111111111
Question 2 1111111111
Question 3 1111000000
Question 4 1111111111
Question 5 1111111000
Question 6 0000111100
Question 7 0000000100
Question 8 1111100000
Question 9 0000110000
F-score 6666765533
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