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

The zones of discrimination were as such:

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

Check Point Software Technologies, Ltd. has an F-score of 5 indicating the company's financial situation is typical for a stable company.

CHKP' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of Check Point Software Technologies, Ltd. was 8. The lowest was 3. And the median was 5.


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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 194.13 + 159.701 + 151.008 + 147.96 = $653 Mil.
Cash Flow from Operations was 58.247 + 195.478 + 204.659 + 331.442 = $790 Mil.
Revenue was 387.075 + 344.127 + 340.172 + 322.73 = $1,394 Mil.
Gross Profit was 340.88 + 303.998 + 300.859 + 285.733 = $1,231 Mil.
Total Assets at the begining of this year (Dec12) was $4,545 Mil.
Total Assets was $4,886 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $1,600 Mil.
Total Current Liabilities was $987 Mil.
Net Income was 173.986 + 152.407 + 149.981 + 143.626 = $620 Mil.

Revenue was 368.574 + 332.356 + 328.649 + 313.116 = $1,343 Mil.
Gross Profit was 324.146 + 294.076 + 290.697 + 274.615 = $1,184 Mil.
Total Assets at the begining of last year (Dec11) was $4,128 Mil.
Total Assets was $4,545 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $1,924 Mil.
Total Current Liabilities was $863 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.

Check Point Software Technologies, Ltd.'s current net income was 653. ==> 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.

Check Point Software Technologies, Ltd.'s current cash flow from operations was 790. ==> 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 (Dec12)
=652.799/4544.885
=0.14363378

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=620/4128.063
=0.15019151

Check Point Software Technologies, Ltd.'s return on assets of this year was 0.14363378. Check Point Software Technologies, Ltd.'s return on assets of last year was 0.15019151. ==> 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.

Check Point Software Technologies, Ltd.'s current net income was 653. Check Point Software Technologies, Ltd.'s current cash flow from operations was 790. ==> 790 > 653 ==> 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
=0/4886.437
=0

Gearing (Last Year)=Long-Term Debt/Total Assets
=0/4544.885
=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. ==> Last year is lower ==> 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
=1600.318/986.854
=1.62163603

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1923.791/862.648
=2.23009965

Check Point Software Technologies, Ltd.'s current ratio of this year was 1.62163603. Check Point Software Technologies, Ltd.'s current ratio of last year was 2.23009965. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Check Point Software Technologies, Ltd.'s number of shares in issue this year was 196.8. Check Point Software Technologies, Ltd.'s number of shares in issue last year was 204.3. ==> 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
=1231.47/1394.104
=0.88334156

Gross Margin (Last Year)=Gross Profit/Revenue
=1183.534/1342.695
=0.88146154

Check Point Software Technologies, Ltd.'s gross margin of this year was 0.88334156. Check Point Software Technologies, Ltd.'s gross margin of last year was 0.88146154. ==> This year's gross margin is higher. ==> Score 1.

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 (Dec12)
=1394.104/4544.885
=0.30674131

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=1342.695/4128.063
=0.3252603

Check Point Software Technologies, Ltd.'s asset turnover of this year was 0.30674131. Check Point Software Technologies, Ltd.'s asset turnover of last year was 0.3252603. ==> 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+0+0+1+1+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

Check Point Software Technologies, Ltd. has an F-score of 5 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.

Check Point Software Technologies, Ltd. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 0101111100
Q4 1111111111
Q5 0000000000
Q6 0100100100
Q7 0111110011
Q8 0100000111
Q9 0101011000
F-score 3846665655

Check Point Software Technologies, Ltd. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1110100000
Q4 1111111111
Q5 0000000000
Q6 1111100000
Q7 0111111111
Q8 1111111111
Q9 0000000000
F-score 6776755555
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