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DR Horton Inc (NYSE:DHI)
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

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

DHI' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 3

2
8

During the past 13 years, the highest Piotroski F-Score of DR Horton Inc was 8. The lowest was 2. And the median was 4.


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 131 + 123.2 + 139.5 + 146 = $540 Mil.
Cash Flow from Operations was -259.4 + -7.5 + -94.8 + -296 = $-658 Mil.
Revenue was 1735 + 1670.6 + 1859.9 + 1692.8 = $6,958 Mil.
Gross Profit was 415.2 + 397 + 413.4 + 397.4 = $1,623 Mil.
Total Assets at the begining of this year (Mar13) was $8,233 Mil.
Total Assets was $9,373 Mil.
Long-Term Debt was $3,862 Mil.
Total Current Assets was $7,815 Mil.
Total Current Liabilities was $1,161 Mil.
Net Income was 111 + 66.3 + 100.1 + 787.8 = $1,065 Mil.

Revenue was 1431.6 + 1275.1 + 1336.2 + 1150 = $5,193 Mil.
Gross Profit was 322.4 + 272.8 + 269.9 + 232.1 = $1,097 Mil.
Total Assets at the begining of last year (Mar12) was $5,485 Mil.
Total Assets was $8,233 Mil.
Long-Term Debt was $3,273 Mil.
Total Current Assets was $7,209 Mil.
Total Current Liabilities was $1,216 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.

DR Horton Inc's current net income was 540. ==> 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.

DR Horton Inc's current cash flow from operations was -658. ==> Negative ==> Score 0.

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)
=539.7/8232.5
=0.06555724

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=1065.2/5484.9
=0.19420591

DR Horton Inc's return on assets of this year was 0.06555724. DR Horton Inc's return on assets of last year was 0.19420591. ==> 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.

DR Horton Inc's current net income was 540. DR Horton Inc's current cash flow from operations was -658. ==> -658 =< 540 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=3862.1/9372.8
=0.41205403

Gearing (Last Year)=Long-Term Debt/Total Assets
=3273/8232.5
=0.3975706

DR Horton Inc's gearing of this year was 0.41205403. DR Horton Inc's gearing of last year was 0.3975706. ==> 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
=7814.8/1161.1
=6.73051417

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=7209.1/1215.8
=5.92951143

DR Horton Inc's current ratio of this year was 6.73051417. DR Horton Inc's current ratio of last year was 5.92951143. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

DR Horton Inc's number of shares in issue this year was 366.3. DR Horton Inc's number of shares in issue last year was 365.4. ==> There is more number of shares in issue this year. ==> Score 0.

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
=1623/6958.3
=0.23324663

Gross Margin (Last Year)=Gross Profit/Revenue
=1097.2/5192.9
=0.21128849

DR Horton Inc's gross margin of this year was 0.23324663. DR Horton Inc's gross margin of last year was 0.21128849. ==> 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 (Mar13)
=6958.3/8232.5
=0.8452232

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=5192.9/5484.9
=0.94676293

DR Horton Inc's asset turnover of this year was 0.8452232. DR Horton Inc's asset turnover of last year was 0.94676293. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+0+0+0+0+1+0+1+0
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

DR Horton 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


Historical Data

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

DR Horton Inc Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
Q1 1110001111
Q2 0001111100
Q3 1100011010
Q4 0001111000
Q5 1010101110
Q6 1001010001
Q7 0011000100
Q8 1100011011
Q9 1100001011
F-score 6434357454

DR Horton Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 0000000000
Q3 1111110000
Q4 0000000000
Q5 1111000000
Q6 1010111111
Q7 1000000000
Q8 1111111111
Q9 1111111110
F-score 7565554443
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