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Sycamore Networks Inc  (OTCPK:SCMR) Piotroski F-Score: 0 (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

Sycamore Networks Inc has an F-score of 2. It is a bad or low score, which usually implies poor business operation.


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.

Sycamore Networks Inc Annual Data

Jul03 Jul04 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 2.00 6.00 3.00 4.00

Sycamore Networks Inc Quarterly Data

Apr08 Jul08 Oct08 Jan09 Apr09 Jul09 Oct09 Jan10 Apr10 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13
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 4.00 4.00 4.00 3.00 2.00

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 (Jan13) TTM:Last Year (Jan12) TTM:
Net Income was -5.091 + -2.525 + -6.756 + -5.24 = $-19.61 Mil.
Cash Flow from Operations was -0.059 + -0.362 + -5.013 + -8.828 = $-14.26 Mil.
Revenue was 11.922 + 16.799 + 12.064 + 9.47 = $50.26 Mil.
Gross Profit was 6.467 + 9.62 + 7.161 + 5.449 = $28.70 Mil.
Average Total Assets from the begining of this year (Jan12)
to the end of this year (Jan13) was
(468.495 + 462.927 + 461.934 + 164.983 + 87.093) / 5 = $329.0864 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $468.50 Mil.
Long-Term Debt & Capital Lease Obligation was $0.00 Mil.
Total Current Assets was $83.41 Mil.
Total Current Liabilities was $13.02 Mil.
Total Assets was -4.136 + -3.618 + -1.614 + -3.694 = $-13.06 Mil.

Revenue was 11.863 + 12.959 + 15.38 + 13.184 = $53.39 Mil.
Gross Profit was 6.982 + 7.332 + 9.118 + 7.749 = $31.18 Mil.
Average Total Assets from the begining of last year (Jan11)
to the end of last year (Jan12) was
(474.907 + 468.975 + 469.737 + 465.006 + 468.495) / 5 = $469.424 Mil.
Total Assets at the begining of last year (Jan11) was $474.91 Mil.
Long-Term Debt & Capital Lease Obligation was $0.00 Mil.
Total Current Assets was $388.65 Mil.
Total Current Liabilities was $18.50 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.

Sycamore Networks Inc's current Net Income (TTM) was {NetIncome0_f}. ==> Negative ==> Score 0.

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.

Sycamore Networks Inc's current Cash Flow from Operations (TTM) was -14.26. ==> Negative ==> Score 0.

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(Jan12)
=-19.612/468.495
=-0.04186171

ROA (Last Year)=Net Income/Total Assets(Jan11)
=-13.062/474.907
=-0.02750433

Sycamore Networks Inc's return on assets of this year was -0.04186171. Sycamore Networks Inc's return on assets of last year was -0.02750433. ==> 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.

Sycamore Networks Inc's current Net Income (TTM) was -19.61. Sycamore Networks Inc's current Cash Flow from Operations (TTM) was -14.26. ==> -14.26 > -19.61 ==> 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.

Sycamore Networks Inc's gearing of this year was 0. Sycamore Networks Inc's gearing of last year was 0. ==> 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: Jan13)=Total Current Assets/Total Current Liabilities
=83.414/13.015
=6.40906646

Current Ratio (Last Year: Jan12)=Total Current Assets/Total Current Liabilities
=388.645/18.5
=21.00783784

Sycamore Networks Inc's current ratio of this year was 6.40906646. Sycamore Networks Inc's current ratio of last year was 21.00783784. ==> 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.

Sycamore Networks Inc's number of shares in issue this year was 28.9. Sycamore Networks Inc's number of shares in issue last year was 28.8. ==> 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
=28.697/50.255
=0.57102776

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=31.181/53.386
=0.58406698

Sycamore Networks Inc's gross margin of this year was 0.57102776. Sycamore Networks Inc's gross margin of last year was 0.58406698. ==> 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 (Jan12)
=50.255/468.495
=0.10726902

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jan11)
=53.386/474.907
=0.11241359

Sycamore Networks Inc's asset turnover of this year was 0.10726902. Sycamore Networks Inc's asset turnover of last year was 0.11241359. ==> 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
=0+0+0+1+1+0+0+0+0
=2

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

Sycamore Networks Inc has an F-score of 2. 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.


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