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

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

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 7.


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 708.5 + 325.8 + 234.1 + 498.2 = $1,767 Mil.
Cash Flow from Operations was 750 + 37.5 + 861 + -110.4 = $1,538 Mil.
Revenue was 1132.6 + 1326.3 + 1097 + 1714.9 = $5,271 Mil.
Gross Profit was 442.8 + 593.8 + 386.1 + 865.2 = $2,288 Mil.
Total Assets at the begining of this year (Mar13) was $10,338 Mil.
Total Assets was $12,476 Mil.
Long-Term Debt was $4,592 Mil.
Total Current Assets was $4,911 Mil.
Total Current Liabilities was $1,436 Mil.
Net Income was 406.5 + 470.7 + 403.3 + 606.3 = $1,887 Mil.

Revenue was 1336.5 + 1481.4 + 1359.4 + 1735.6 = $5,913 Mil.
Gross Profit was 675.1 + 656.2 + 702 + 1043.3 = $3,077 Mil.
Total Assets at the begining of last year (Mar12) was $9,617 Mil.
Total Assets was $10,338 Mil.
Long-Term Debt was $1,600 Mil.
Total Current Assets was $2,908 Mil.
Total Current Liabilities was $1,285 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.

CF Industries Holdings Inc's current net income was 1,767. ==> 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.

CF Industries Holdings Inc's current cash flow from operations was 1,538. ==> 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)
=1766.6/10338.4
=0.17087751

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=1886.8/9616.9
=0.19619628

CF Industries Holdings Inc's return on assets of this year was 0.17087751. CF Industries Holdings Inc's return on assets of last year was 0.19619628. ==> 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 was 1,767. CF Industries Holdings Inc's current cash flow from operations was 1,538. ==> 1,538 =< 1,767 ==> 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)=Long-Term Debt/Total Assets
=4592.3/12475.5
=0.36810549

Gearing (Last Year)=Long-Term Debt/Total Assets
=1600/10338.4
=0.15476283

CF Industries Holdings Inc's gearing of this year was 0.36810549. CF Industries Holdings Inc's gearing of last year was 0.15476283. ==> 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)=Total Current Assets/Total Current Liabilities
=4911.1/1435.7
=3.4207007

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2907.7/1285.3
=2.2622734

CF Industries Holdings Inc's current ratio of this year was 3.4207007. CF Industries Holdings Inc's current ratio of last year was 2.2622734. ==> 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 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 54.9. CF Industries Holdings Inc's number of shares in issue last year was 62.8. ==> 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)=Gross Profit/Revenue
=2287.9/5270.8
=0.43407073

Gross Margin (Last Year)=Gross Profit/Revenue
=3076.6/5912.9
=0.52031998

CF Industries Holdings Inc's gross margin of this year was 0.43407073. CF Industries Holdings Inc's gross margin of last year was 0.52031998. ==> 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)
=5270.8/10338.4
=0.50982744

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=5912.9/9616.9
=0.6148447

CF Industries Holdings Inc's asset turnover of this year was 0.50982744. CF Industries Holdings Inc's asset turnover of last year was 0.6148447. ==> 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+1+1+0+0
=4

Good or high score = 8 or 9

Bad or low score = 0 or 1

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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 011111111
Q2 111111111
Q3 011100110
Q4 111011111
Q5 111100110
Q6 011010111
Q7 100110011
Q8 001110110
Q9 111001000
F-score 578664785

CF Industries Holdings Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 1011111000
Q4 1111111110
Q5 1101110000
Q6 1111111111
Q7 1111111111
Q8 1111110000
Q9 0011000000
F-score 8789886554
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