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DR Horton Inc (NYSE:DHI)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

DR Horton Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

DHI' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 6

1
8

During the past 13 years, the highest Piotroski F-Score of DR 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 own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 166.2 + 142.5 + 147.9 + 221.4 = $678 Mil.
Cash Flow from Operations was -87.7 + -129 + -39.8 + 357.4 = $101 Mil.
Revenue was 2472.4 + 2302.6 + 2398 + 2950.8 = $10,124 Mil.
Gross Profit was 522.7 + 488.2 + 506 + 630.4 = $2,147 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(9716.6 + 10202.5 + 10338.7 + 10713.1 + 10863.5) / 5 = $10366.88 Mil.
Total Assets at the begining of this year (Jun14) was $9,717 Mil.
Long-Term Debt was $3,821 Mil.
Total Current Assets was $8,929 Mil.
Total Current Liabilities was $1,411 Mil.
Net Income was 139.5 + 123.2 + 131 + 113.1 = $507 Mil.

Revenue was 1859.9 + 1670.6 + 1735 + 2147 = $7,413 Mil.
Gross Profit was 413.4 + 397 + 415.2 + 421.5 = $1,647 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(8287 + 8856.4 + 8927.2 + 9372.8 + 9716.6) / 5 = $9032 Mil.
Total Assets at the begining of last year (Jun13) was $8,287 Mil.
Long-Term Debt was $3,445 Mil.
Total Current Assets was $8,553 Mil.
Total Current Liabilities was $1,255 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.

DR Horton Inc's current net income (TTM) was 678. ==> 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.

DR Horton Inc's current cash flow from operations (TTM) was 101. ==> 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.

DR Horton Inc's return on assets of this year was 0.06977749. DR Horton Inc's return on assets of last year was 0.06115603. ==> 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.

DR Horton Inc's current net income (TTM) was 678. DR Horton Inc's current cash flow from operations (TTM) was 101. ==> 101 <= 678 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=3821.1/10366.88
=0.36858727

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=3445.3/9032
=0.38145483

DR Horton Inc's gearing of this year was 0.36858727. DR Horton Inc's gearing of last year was 0.38145483. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=8928.5/1411.4
=6.32598838

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=8553.3/1255
=6.81537849

DR Horton Inc's current ratio of this year was 6.32598838. DR Horton Inc's current ratio of last year was 6.81537849. ==> 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.

DR Horton Inc's number of shares in issue this year was 0. DR Horton Inc's number of shares in issue last year was 367.8. ==> 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
=2147.3/10123.8
=0.21210415

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1647.1/7412.5
=0.22220573

DR Horton Inc's gross margin of this year was 0.21210415. DR Horton Inc's gross margin of last year was 0.22220573. ==> Last year's gross margin is higher ==> Score 0.

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 (Jun14)
=10123.8/9716.6
=1.04190766

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=7412.5/8287
=0.89447327

DR Horton Inc's asset turnover of this year was 1.04190766. DR Horton Inc's asset turnover of last year was 0.89447327. ==> 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+0+1+0+1
=6

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

DR Horton Inc has an F-score of 6 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Question 1 1100011111
Question 2 0011111000
Question 3 1000110100
Question 4 0011110000
Question 5 0111011010
Question 6 0010100101
Question 7 0110001000
Question 8 1000110110
Question 9 1000010111
F-score 4353574543

DR Horton Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 1111111111
Question 2 0000000001
Question 3 1000000001
Question 4 0000000000
Question 5 0010110111
Question 6 1101111000
Question 7 0000000001
Question 8 1111110000
Question 9 1111011111
F-score 5444453336
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