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Warning signs in Asiamet Resources' Piotroski F-Score

12th Jul by Jack Brumby

Even though Stockopedia's StockReports provide a wealth of financial data, filtering out the most dangerous stocks can be hard to do and takes time. But what if you could gauge financial health with a single number?

This is what the Piotroski F-Score sets out to do. Unfortunately, what the F-Score algorithm says for Healthcare operator Asiamet Resources (LON:ARS) is not good - especially considering for the fiscal year ended 31 December 2018, Asiamet Resources made no revenues and net loss increased 47% to $10.7m.

GET MORE DATA-DRIVEN INSIGHTS INTO LON:ARS »

Why the Piotroski F-Score matters

The Piotroski F-Score is a nine-strong checklist split that, unlike most ratios, the F-Score looks more deeply into the direction in which a company’s financial health is moving. Keeping on top of these trends can help us anticipate how a stock might perform.

When a stock gets beaten down it falls to the bottom of the stock market. From here there it either:

  • Stumbles along, zombie-like,
  • Tumbles into administration, or
  • Recovers emphatically

Stanford Finance Professor Joseph Piotroski wanted to identify the latter. After settling on the F-Score, he produced some remarkable results.

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 Asiamet Resources gets a lowly F-Score of 2 out of a possible 9.

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