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Baker Hughes Inc. (NYSE:BHI)
Piotroski F-Score
0 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Baker Hughes Inc. has an F-score of 6 indicating the company's financial situation is typical for a stable company.

BHI' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 0

2
8

During the past 13 years, the highest Piotroski F-Score of Baker Hughes Inc. was 8. The lowest was 2. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 328 + 0 + 341 + 240 = $909 Mil.
Cash Flow from Operations was 303 + 2081 + 1080 + 692 = $4,156 Mil.
Revenue was 5731 + 0 + 5787 + 5487 = $17,005 Mil.
Gross Profit was 1011 + 0 + 1037 + 896 = $2,944 Mil.
Total Assets at the begining of this year (Mar13) was $27,154 Mil.
Total Assets was $27,896 Mil.
Long-Term Debt was $3,878 Mil.
Total Current Assets was $11,266 Mil.
Total Current Liabilities was $4,526 Mil.
Net Income was 267 + 214 + 279 + 439 = $1,199 Mil.

Revenue was 5230 + 5325 + 5355 + 5326 = $21,236 Mil.
Gross Profit was 904 + 884 + 959 + 1072 = $3,819 Mil.
Total Assets at the begining of last year (Mar12) was $25,558 Mil.
Total Assets was $27,154 Mil.
Long-Term Debt was $3,844 Mil.
Total Current Assets was $10,835 Mil.
Total Current Liabilities was $4,496 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Baker Hughes Inc.'s current net income was 909. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Baker Hughes Inc.'s current cash flow from operations was 4,156. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Mar13)
=909/27154
=0.03347573

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=1199/25558
=0.0469129

Baker Hughes Inc.'s return on assets of this year was 0.03347573. Baker Hughes Inc.'s return on assets of last year was 0.0469129. ==> Last year is higher ==> Score 0.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Baker Hughes Inc.'s current net income was 909. Baker Hughes Inc.'s current cash flow from operations was 4,156. ==> 4,156 > 909 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=3878/27896
=0.13901635

Gearing (Last Year)=Long-Term Debt/Total Assets
=3844/27154
=0.14156294

Baker Hughes Inc.'s gearing of this year was 0.13901635. Baker Hughes Inc.'s gearing of last year was 0.14156294. ==> This year is lower. ==> Score 1.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=11266/4526
=2.48917366

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=10835/4496
=2.40991993

Baker Hughes Inc.'s current ratio of this year was 2.48917366. Baker Hughes Inc.'s current ratio of last year was 2.40991993. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Baker Hughes Inc.'s number of shares in issue this year was 441. Baker Hughes Inc.'s number of shares in issue last year was 444. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=2944/17005
=0.17312555

Gross Margin (Last Year)=Gross Profit/Revenue
=3819/21236
=0.17983613

Baker Hughes Inc.'s gross margin of this year was 0.17312555. Baker Hughes Inc.'s gross margin of last year was 0.17983613. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Mar13)
=17005/27154
=0.62624291

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=21236/25558
=0.83089444

Baker Hughes Inc.'s asset turnover of this year was 0.62624291. Baker Hughes Inc.'s asset turnover of last year was 0.83089444. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+1+1+0+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Baker Hughes Inc. has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Baker Hughes Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1110001100
Q4 1100011011
Q5 1111001011
Q6 1111010100
Q7 0011100000
Q8 1110000100
Q9 1111101000
F-score 8886446544

Baker Hughes Inc. Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 111111111
Q2 111111111
Q3 101000000
Q4 000111111
Q5 011111111
Q6 100000001
Q7 000000001
Q8 110000000
Q9 001100000
F-score 5455444440
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