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CF Industries Holdings Inc (NYSE:CF)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

CF Industries Holdings Inc has an F-score of 3 indicating the company's financial situation is typical for a stable company.

CF' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 3

3
9

During the past 13 years, the highest Piotroski F-Score of CF Industries Holdings Inc was 9. The lowest was 3. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 325.8 + 708.5 + 312.6 + 130.9 = $1,478 Mil.
Cash Flow from Operations was 37.5 + 750 + -194.7 + 621.6 = $1,214 Mil.
Revenue was 1326.3 + 1132.6 + 1472.7 + 921.4 = $4,853 Mil.
Gross Profit was 593.8 + 442.8 + 590.3 + 301.1 = $1,928 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(10799 + 10678.1 + 12475.5 + 11304.9 + 11659.8) / 5 = $11,383 Mil.
Total Assets as of Sep13 was $10,799 Mil.
Long-Term Debt was $4,592 Mil.
Total Current Assets was $3,339 Mil.
Total Current Liabilities was $1,049 Mil.
Net Income was 470.7 + 406.5 + 498.2 + 234.1 = $1,610 Mil.

Revenue was 1481.4 + 1336.5 + 1714.9 + 1097 = $5,630 Mil.
Gross Profit was 656.2 + 675.1 + 865.2 + 386.1 = $2,583 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(10182.7 + 10166.9 + 10338.4 + 10251.6 + 10799) / 5 = $10,348 Mil.
Total Assets as of Sep12 was $10,183 Mil.
Long-Term Debt was $3,098 Mil.
Total Current Assets was $3,060 Mil.
Total Current Liabilities was $913 Mil.

Profitability

Q1. Return on Assets (ROA)

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

Score 1 if positive, 0 if negative.

CF Industries Holdings Inc's current net income (ttm) was 1,478. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

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

Score 1 if positive, 0 if negative.

CF Industries Holdings Inc's current cash flow from operations (ttm) was 1,214. ==> 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 (TTM)/Beginning of This Year Total Assets (Sep13)
=1477.8/10799
=0.136846

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Sep12)
=1609.5/10182.7
=0.1580622

CF Industries Holdings Inc's return on assets of this year was 0.136846. CF Industries Holdings Inc's return on assets of last year was 0.1580622. ==> 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.

CF Industries Holdings Inc's current net income (ttm) was 1,478. CF Industries Holdings Inc's current cash flow from operations (ttm) was 1,214. ==> 1,214 =< 1,478 ==> CFROA =< ROA ==> Score 0.

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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=4592.4/11383.46
=0.40342743

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=3098/10347.72
=0.29938962

CF Industries Holdings Inc's gearing of this year was 0.40342743. CF Industries Holdings Inc's gearing of last year was 0.29938962. ==> Last year is lower than this year ==> Score 0.

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: Sep14)=Total Current Assets/Total Current Liabilities
=3338.7/1048.8
=3.1833524

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=3059.7/912.9
=3.35162668

CF Industries Holdings Inc's current ratio of this year was 3.1833524. CF Industries Holdings Inc's current ratio of last year was 3.35162668. ==> Last year's current ratio is higher ==> Score 0.

Q7. Change in Shares in Issue

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

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

CF Industries Holdings Inc's number of shares in issue this year was 49.9. CF Industries Holdings Inc's number of shares in issue last year was 57.5. ==> There is smaller number of shares in issue this year, or the same. ==> 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: TTM)=Gross Profit/Revenue
=1928/4853
=0.39728003

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2582.6/5629.8
=0.45873743

CF Industries Holdings Inc's gross margin of this year was 0.39728003. CF Industries Holdings Inc's gross margin of last year was 0.45873743. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by begining of the year total assets) 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 (TTM)/Beginning of This Year Total Assets (Sep13)
=4853/10799
=0.44939346

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Sep12)
=5629.8/10182.7
=0.5528789

CF Industries Holdings Inc's asset turnover of this year was 0.44939346. CF Industries Holdings Inc's asset turnover of last year was 0.5528789. ==> 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+0+0+0+1+0+0
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

CF Industries Holdings Inc has an F-score of 3 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, Altman Z-Score, Beneish M-Score


Historical Data

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

CF Industries Holdings Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 011111111
Q2 111111111
Q3 011100110
Q4 111011111
Q5 101100110
Q6 011010111
Q7 100110011
Q8 001110110
Q9 111001000
F-score 568664785

CF Industries Holdings Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 1111100000
Q4 1111111000
Q5 1111000000
Q6 1111111110
Q7 1111111111
Q8 1111000000
Q9 1100000000
F-score 9988655443
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