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Will N Brown's (LON:BWNG) share price suffer because of its poor F-Score?

19th Mar '19 by 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.

Thankfully there are measures like the Piotroski F-Score, which distill a wealth of financial data into one easily comparable score. Unfortunately, what the F-Score algorithm says for Simply Be and Jacamo operator N Brown (LON:BWNG) is not good. First a little bit more on what this number means.

GET MORE DATA-DRIVEN INSIGHTS INTO LON:BWNG »

What the Piotroski F-Score says about N Brown (LON:BWNG)

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 N Brown (LON:BWNG) gets a lowly F-Score of 2 out of a possible 9...

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This means that not only is N Brown (LON:BWNG) financial health deteriorating, it currently fits in with the stocks that Piotroski identified as being five times more likely to go bankrupt or delist. Looking at the group's recent financial results for the 26 weeks to 01 September 2018, we can see that although revenues increased 1% to £457.8M, net loss widened 23% to £26M.

This performance highlights why paying attention to systematic checklists such as the F-Score can provide some much-needed clarity and help us make considered, consistent decisions.

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