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Check Point Software Technologies Ltd (NAS:CHKP)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

The zones of discrimination were as such:

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

Check Point Software Technologies Ltd has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

CHKP' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 8

2
9

During the past 13 years, the highest Piotroski F-Score of Check Point Software Technologies Ltd was 9. 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 (Mar16) TTM:Last Year (Mar15) TTM:
Net Income was 162.636 + 167.743 + 194.604 + 167.422 = $692 Mil.
Cash Flow from Operations was 192.726 + 227.827 + 241.59 + 323.748 = $986 Mil.
Revenue was 395.334 + 403.856 + 458.072 + 404.271 = $1,662 Mil.
Gross Profit was 349.731 + 356.452 + 403.352 + 359.262 = $1,469 Mil.
Average Total Assets from the begining of this year (Mar15)
to the end of this year (Mar16) was
(4910.589 + 4884.993 + 4858.168 + 5069.88 + 5013.552) / 5 = $4947.4364 Mil.
Total Assets at the begining of this year (Mar15) was $4,911 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $1,666 Mil.
Total Current Liabilities was $1,006 Mil.
Net Income was 159.656 + 161.047 + 185.783 + 160.883 = $667 Mil.

Revenue was 362.598 + 370.37 + 420.642 + 372.576 = $1,526 Mil.
Gross Profit was 321.587 + 325.641 + 368.719 + 331.246 = $1,347 Mil.
Average Total Assets from the begining of last year (Mar14)
to the end of last year (Mar15) was
(4773.289 + 4772.021 + 4766.125 + 4948.818 + 4910.589) / 5 = $4834.1684 Mil.
Total Assets at the begining of last year (Mar14) was $4,773 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $1,576 Mil.
Total Current Liabilities was $904 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.

Check Point Software Technologies Ltd's current net income (TTM) was 692. ==> 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.

Check Point Software Technologies Ltd's current cash flow from operations (TTM) was 986. ==> 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 (Mar15)
=692.405/4910.589
=0.14100243

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=667.369/4773.289
=0.13981324

Check Point Software Technologies Ltd's return on assets of this year was 0.14100243. Check Point Software Technologies Ltd's return on assets of last year was 0.13981324. ==> This year is higher. ==> Score 1.

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.

Check Point Software Technologies Ltd's current net income (TTM) was 692. Check Point Software Technologies Ltd's current cash flow from operations (TTM) was 986. ==> 986 > 692 ==> 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: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=0/4947.4364
=0

Gearing (Last Year: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=0/4834.1684
=0

Check Point Software Technologies Ltd's gearing of this year was 0. Check Point Software Technologies Ltd's gearing of last year was 0. ==> This year is lower or equal to last year. ==> Score 1.

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: Mar16)=Total Current Assets/Total Current Liabilities
=1665.602/1005.959
=1.65573547

Current Ratio (Last Year: Mar15)=Total Current Assets/Total Current Liabilities
=1576.268/904.229
=1.7432177

Check Point Software Technologies Ltd's current ratio of this year was 1.65573547. Check Point Software Technologies Ltd's current ratio of last year was 1.7432177. ==> 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.

Check Point Software Technologies Ltd's number of shares in issue this year was 177. Check Point Software Technologies Ltd's number of shares in issue last year was 187.6. ==> 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
=1468.797/1661.533
=0.8840011

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1347.193/1526.186
=0.88271875

Check Point Software Technologies Ltd's gross margin of this year was 0.8840011. Check Point Software Technologies Ltd's gross margin of last year was 0.88271875. ==> This year's gross margin is higher. ==> Score 1.

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 (Mar15)
=1661.533/4910.589
=0.33835717

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=1526.186/4773.289
=0.31973467

Check Point Software Technologies Ltd's asset turnover of this year was 0.33835717. Check Point Software Technologies Ltd's asset turnover of last year was 0.31973467. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

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

Check Point Software Technologies Ltd has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.


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.

Check Point Software Technologies Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0111110001
Question 4 1111111111
Question 5 1111111111
Question 6 0010010010
Question 7 1111001111
Question 8 0000011101
Question 9 0101100001
F-score 5777676668

Check Point Software Technologies Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Question 1 1111111111
Question 2 1111111111
Question 3 0000000111
Question 4 1000111111
Question 5 1111111111
Question 6 0011100000
Question 7 1111111111
Question 8 1111000011
Question 9 0000011111
F-score 6566666788
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