UK markets closed

Will John Laing's (LON:JLG) share price suffer because of its poor F-Score?

Jack Brumby

It's hard to keep tabs on hundreds of companies, but that's what we have to do if we want to find overlooked investment opportunities. Sometimes there just isn't time to dig through the annual accounts of multiple companies, however.

Thankfully there are measures like the Piotroski F-Score, which distil a wealth of financial data into one easily comparable score. Unfortunately, what the F-Score algorithm says for Industrials operator John Laing (LON:JLGis not good. First a little bit more on what this number means.


What the Piotroski F-Score says about John Laing (LON:JLG)

The Piotroski F-Score is a nine-strong checklist split up into three sections, each looking at a different part of a company's financial situation. Unlike most ratios, the F-Score looks more deeply into the direction in which a company’s financial health is moving.

Piotroski found that weak stocks with an F-Score of 2 or less are five times more likely to either go bankrupt or delist due to financial problems. Working our way through Piotroski's checklist, we can see that John Laing gets a lowly F-Score of 2 out of a possible 9...

This means that not only is John Laing (LON:JLG) financial health deteriorating, it currently fits in with the stocks that Piotroski identified as being five times more likely to go bankrupt or delist. This many not end up being the case for JLG, but it does suggest further research is required.

Fortify your portfolio with simple, effective tools

The problem areas for John Laing identified here can be explored in more depth on Stockopedia's research platform. All the best investors have stringent due diligence processes that reduce the chances of them suffering big losses, so why not take a leaf out of their book?

Simple tools can help us better measure and understand the risks we take. That's why the Stockopedia team has been busy building new ways of understanding investment risks and company characteristics. In this webinar, we talk about two or our most popular innovations: StockRank Styles and RiskRatings. These indicators transform a ton of vital financial information into intuitive classifications, allowing you to get an instant feel for any company on any market - sign up for a free trial to see how your stocks stack up.