The Fundamental Health Trend Meter gives a visual representation of the trend in a company's accounts and its overall financial health. It is based on the Piotroski F-Score, a nine-criteria scoring system developed by financial academic, Joseph Piotroski in a famous research paper. Each of the nine points relate to the change in a ratio based on the company's accounts.
Companies with a score of 8 or 9 have been found as a group to outperform weak stocks by 7.5% annually over a 20 year period. The weakest stocks, scoring 2 or lower, were found by Piotroski to be five times more likely to fall into financial problems.
J Sainsbury has an F-Score of 6 indicating
the company's financial situation is typical for a stable company.
Profitability
"A positive earnings trend is suggestive of an improvement in the firm’s underlying ability to generate positive future cash flows."
Is the company making a profit?
Testing for:
ROA TTM > 0
J Sainsbury Details:
ROA TTM = 4.99
Testing for:
CFROA TTM > 0
J Sainsbury Details:
CFROA TTM = 9.25
Is it making more cash than it's reporting as profit?
Testing for:
CFROA TTM > ROA TTM
J Sainsbury Details:
CFROA TTM = 9.25 ,
ROA TTM = 4.99
Is it more profitable than it was last year?
Testing for:
ROA TTM > ROA Prior TTM
J Sainsbury Details:
ROA TTM = 4.99 ,
ROA Prior TTM = 5.25
Leverage, Liquidity, and Source of funds
"I assume that an increase in leverage, a deterioration of liquidity, or the use of external financing is a bad signal about financial risk."
Is the company's long term debt reducing or stable?
Testing for:
LT Debt / Avg Assets <= Long Term Debt/Assets PTTM
J Sainsbury Details:
LT Debt / Avg Assets = 21.1 ,
Long Term Debt/Assets PTTM = 22.6
Is it increasing its ability to pay short term debts
Testing for:
Current Ratio > Current Ratio PTTM
J Sainsbury Details:
Current Ratio = 0.63 ,
Current Ratio PTTM = 0.65
Is the company trading without having to raise funds from shareholders?
Testing for:
Equity Dilution Funding (TTM) <= 0.01 x Mkt Cap (Local)
J Sainsbury Details:
Equity Dilution Funding (TTM) = 15.0 ,
Mkt Cap (Local) = 7,221
Operating Efficiency
"The remaining two signals are designed to measure changes in the efficiency of the firm’s operations."
Is pricing power improving and/or costs reducing?
Testing for:
Gross Mgn % > Gross Mgn % Prior TTM
J Sainsbury Details:
Gross Mgn % = 5.45 ,
Gross Mgn % Prior TTM = 5.43
Is it more productive than last year?
Testing for:
Asset Turnover (Piotroski) TTM > Asset Turnover (Piotroksi), PTTM
J Sainsbury Details:
Asset Turnover (Piotroski) TTM = 1.80 ,
Asset Turnover (Piotroksi), PTTM = 1.81
