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

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

CF Industries Holdings Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

CF' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 4

4
8

During the past 13 years, the highest Piotroski F-Score of CF Industries Holdings Inc was 8. The lowest was 4. 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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 230.6 + 351.9 + 90.9 + 26.5 = $700 Mil.
Cash Flow from Operations was 530.9 + -32.1 + 572.7 + 132.2 = $1,204 Mil.
Revenue was 953.6 + 1311.5 + 927.4 + 1115.8 = $4,308 Mil.
Gross Profit was 415.8 + 685.9 + 165 + 280.4 = $1,547 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(11254.2 + 11485.3 + 10998.4 + 12869.8 + 12738.9) / 5 = $11869.32 Mil.
Total Assets at the begining of this year (Dec14) was $11,254 Mil.
Long-Term Debt was $5,593 Mil.
Total Current Assets was $1,127 Mil.
Total Current Liabilities was $1,215 Mil.
Net Income was 708.5 + 312.6 + 130.9 + 238.3 = $1,390 Mil.

Revenue was 1132.6 + 1472.7 + 921.4 + 1216.5 = $4,743 Mil.
Gross Profit was 442.8 + 590.3 + 301.1 + 444.3 = $1,779 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(10678.1 + 12475.5 + 11304.9 + 11659.8 + 11254.2) / 5 = $11474.5 Mil.
Total Assets at the begining of last year (Dec13) was $10,678 Mil.
Long-Term Debt was $4,593 Mil.
Total Current Assets was $2,531 Mil.
Total Current Liabilities was $980 Mil.

Profitability

Question 1. 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.

CF Industries Holdings Inc's current net income (TTM) was 700. ==> Positive ==> Score 1.

Question 2. 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.

CF Industries Holdings Inc's current cash flow from operations (TTM) was 1,204. ==> Positive ==> Score 1.

Question 3. 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)/Total Assets at the Beginning of This Year (Dec14)
=699.9/11254.2
=0.06219012

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=1390.3/10678.1
=0.13020107

CF Industries Holdings Inc's return on assets of this year was 0.06219012. CF Industries Holdings Inc's return on assets of last year was 0.13020107. ==> Last year is higher ==> Score 0.

Question 4. 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 700. CF Industries Holdings Inc's current cash flow from operations (TTM) was 1,204. ==> 1,204 > 700 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=5592.7/11869.32
=0.47118959

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=4592.5/11474.5
=0.4002353

CF Industries Holdings Inc's gearing of this year was 0.47118959. CF Industries Holdings Inc's gearing of last year was 0.4002353. ==> Last year is lower than this year ==> Score 0.

Question 6. 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: Dec15)=Total Current Assets/Total Current Liabilities
=1127.1/1215.2
=0.92750165

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=2530.5/979.7
=2.58293355

CF Industries Holdings Inc's current ratio of this year was 0.92750165. CF Industries Holdings Inc's current ratio of last year was 2.58293355. ==> Last year's current ratio is higher ==> Score 0.

Question 7. 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 236.1. CF Industries Holdings Inc's number of shares in issue last year was 256.7. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. 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
=1547.1/4308.3
=0.35909756

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1778.5/4743.2
=0.37495783

CF Industries Holdings Inc's gross margin of this year was 0.35909756. CF Industries Holdings Inc's gross margin of last year was 0.37495783. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year 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 (TTM)/Total Assets at the Beginning of This Year (Dec14)
=4308.3/11254.2
=0.38281708

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=4743.2/10678.1
=0.44419887

CF Industries Holdings Inc's asset turnover of this year was 0.38281708. CF Industries Holdings Inc's asset turnover of last year was 0.44419887. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+0+0+1+0+0
=4

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

CF Industries Holdings Inc has an F-score of 4 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.

CF Industries Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 111111111
Question 2 111111111
Question 3 110011000
Question 4 101111111
Question 5 110011000
Question 6 101011100
Question 7 011001111
Question 8 111011000
Question 9 100100000
F-score 866478544

CF Industries Holdings Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000000
Question 4 1100011111
Question 5 0000001100
Question 6 1111000000
Question 7 1111111111
Question 8 0000000100
Question 9 0000000000
F-score 5544345644
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