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D.R. Horton Inc (NYSE:DHI)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, 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

D.R. Horton Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

DHI' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 8
Current: 7

1
8

During the past 13 years, the highest Piotroski F-Score of D.R. Horton Inc was 8. The lowest was 1. 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 local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Net Income was 195.1 + 249.8 + 283.7 + 206.9 = $936 Mil.
Cash Flow from Operations was 28.4 + 61.7 + 529.4 + -33.3 = $586 Mil.
Revenue was 2767.9 + 3231.9 + 3741.2 + 2904.2 = $12,645 Mil.
Gross Profit was 598.6 + 708.9 + 822.9 + 636.3 = $2,767 Mil.
Average Total Assets from the begining of this year (Dec15)
to the end of this year (Dec16) was
(11179.5 + 11300.2 + 11333.2 + 11558.9 + 11712.1) / 5 = $11416.78 Mil.
Total Assets at the begining of this year (Dec15) was $11,180 Mil.
Long-Term Debt was $3,218 Mil.
Total Current Assets was $9,902 Mil.
Total Current Liabilities was $742 Mil.
Net Income was 147.9 + 221.4 + 238.9 + 157.7 = $766 Mil.

Revenue was 2398 + 2950.8 + 3172.4 + 2416.4 = $10,938 Mil.
Gross Profit was 506 + 630.4 + 663.6 + 524.2 = $2,324 Mil.
Average Total Assets from the begining of last year (Dec14)
to the end of last year (Dec15) was
(10338.7 + 10713.1 + 10863.5 + 11151 + 11179.5) / 5 = $10849.16 Mil.
Total Assets at the begining of last year (Dec14) was $10,339 Mil.
Long-Term Debt was $3,734 Mil.
Total Current Assets was $9,367 Mil.
Total Current Liabilities was $1,351 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.

D.R. Horton Inc's current net income (TTM) was 936. ==> 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.

D.R. Horton Inc's current cash flow from operations (TTM) was 586. ==> 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 (Dec15)
=935.5/11179.5
=0.08367995

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=765.9/10338.7
=0.07408088

D.R. Horton Inc's return on assets of this year was 0.08367995. D.R. Horton Inc's return on assets of last year was 0.07408088. ==> 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.

D.R. Horton Inc's current net income (TTM) was 936. D.R. Horton Inc's current cash flow from operations (TTM) was 586. ==> 586 <= 936 ==> CFROA <= ROA ==> Score 0.

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: Dec16)=Long-Term Debt/Average Total Assets from Dec15 to Dec16
=3217.6/11416.78
=0.28183078

Gearing (Last Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=3734.3/10849.16
=0.34420176

D.R. Horton Inc's gearing of this year was 0.28183078. D.R. Horton Inc's gearing of last year was 0.34420176. ==> 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: Dec16)=Total Current Assets/Total Current Liabilities
=9901.5/742.3
=13.33894652

Current Ratio (Last Year: Dec15)=Total Current Assets/Total Current Liabilities
=9366.6/1350.9
=6.93359982

D.R. Horton Inc's current ratio of this year was 13.33894652. D.R. Horton Inc's current ratio of last year was 6.93359982. ==> This year's current ratio is higher. ==> Score 1.

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.

D.R. Horton Inc's number of shares in issue this year was 377.4. D.R. Horton Inc's number of shares in issue last year was 373.5. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=2766.7/12645.2
=0.21879448

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2324.2/10937.6
=0.21249634

D.R. Horton Inc's gross margin of this year was 0.21879448. D.R. Horton Inc's gross margin of last year was 0.21249634. ==> 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 (Dec15)
=12645.2/11179.5
=1.13110604

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=10937.6/10338.7
=1.05792798

D.R. Horton Inc's asset turnover of this year was 1.13110604. D.R. Horton Inc's asset turnover of last year was 1.05792798. ==> 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+0+1+1+0+1+1
=7

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

D.R. Horton Inc has an F-score of 7. 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 local exchange's currency.

D.R. Horton Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
Question 1 0001111111
Question 2 1111100011
Question 3 0011010011
Question 4 1111000000
Question 5 1101101011
Question 6 1010010111
Question 7 1000100000
Question 8 0011011001
Question 9 0001011111
F-score 5357454367

D.R. Horton Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Question 1 1111111111
Question 2 0001111111
Question 3 0001111111
Question 4 0000011000
Question 5 0111111111
Question 6 1000111011
Question 7 0000000000
Question 8 0000001111
Question 9 1111111111
F-score 3335678677
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