Why you need to look at Nufarm's (ASX:NUF) Piotroski F-Score

Nufarm (ASX:NUF) has been struggling recently, as you can see from its share price chart:

The company develops, manufactures, and sells herbicides and related products to crop producers. The company has been struggling recently, with profits taking a hit. For the fiscal year ended 31 July 2018, Nufarm Limited revenues increased 6% to A$3.31B but registered a net loss of A$26.4M.

Unfortunately, applying the Piotroski F-Score to this mid-cap doesn't do much to dispell these concerns... We'll get into this later, but first a quick refresher on what the F-Score means.

The Piotroski F-Score: one indicator to rule them all?

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. What makes it so useful is that, unlike most ratios, the F-Score looks more deeply into the direction in which a company’s financial health is moving.

Stanford Finance Professor Joseph Piotroski wanted to sort the wheat from the chaff. After settling on the F-Score, he produced some astonishing results that showed high F-Score stocks should be sought out and low F-Score stocks should be avoided.

Why the F-Score does not like Nufarm (ASX:NUF)

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 Nufarm gets a very concerning F-Score of 1 out of a possible 9. Food for thought for anyone looking to hold onto their money. We can see which areas of the checklist Nufarm fails in the graphic below:

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