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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: 3   Max: 7
Current: 3

3
7

During the past 13 years, the highest Piotroski F-Score of DR Horton Inc was 7. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 123.2 + 131 + 113.1 + 166.2 = $534 Mil.
Cash Flow from Operations was -7.5 + -259.4 + -308.2 + -86.3 = $-661 Mil.
Revenue was 1670.6 + 1735 + 2147 + 2472.4 = $8,025 Mil.
Gross Profit was 397 + 415.2 + 421.5 + 522.7 = $1,756 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(8856.4 + 8927.2 + 9372.8 + 9716.6 + 10202.5) / 5 = $9,415 Mil.
Total Assets as of Sep13 was $8,856 Mil.
Long-Term Debt was $3,683 Mil.
Total Current Assets was $8,372 Mil.
Total Current Liabilities was $1,400 Mil.
Net Income was 66.3 + 111 + 146 + 139.5 = $463 Mil.

Revenue was 1275.1 + 1431.6 + 1692.8 + 1859.9 = $6,259 Mil.
Gross Profit was 272.8 + 322.4 + 397.4 + 413.4 = $1,406 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(7248.2 + 7347.3 + 8232.5 + 8287 + 8856.4) / 5 = $7,994 Mil.
Total Assets as of Sep12 was $7,248 Mil.
Long-Term Debt was $2,747 Mil.
Total Current Assets was $7,253 Mil.
Total Current Liabilities was $2,048 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

DR Horton Inc's current net income (ttm) was 534. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

DR Horton Inc's current cash flow from operations (ttm) was -661. ==> 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 (TTM)/Beginning of This Year Total Assets (Sep13)
=533.5/8856.4
=0.06023892

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Sep12)
=462.8/7248.2
=0.06385034

DR Horton Inc's return on assets of this year was 0.06023892. DR Horton Inc's return on assets of last year was 0.06385034. ==> 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 (ttm) was 534. DR Horton Inc's current cash flow from operations (ttm) was -661. ==> -661 =< 534 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=3682.8/9415.1
=0.39115888

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=2746.7/7994.28
=0.34358316

DR Horton Inc's gearing of this year was 0.39115888. DR Horton Inc's gearing of last year was 0.34358316. ==> Last year is lower than this year ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=8372.3/1400
=5.98021429

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=7252.6/2048.3
=3.54078992

DR Horton Inc's current ratio of this year was 5.98021429. DR Horton Inc's current ratio of last year was 3.54078992. ==> 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 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 367.8. DR Horton Inc's number of shares in issue last year was 364.6. ==> There is larger 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: TTM)=Gross Profit/Revenue
=1756.4/8025
=0.21886604

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1406/6259.4
=0.22462217

DR Horton Inc's gross margin of this year was 0.21886604. DR Horton Inc's gross margin of last year was 0.22462217. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by begining of the year total assets) 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)/Beginning of This Year Total Assets (Sep13)
=8025/8856.4
=0.90612438

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Sep12)
=6259.4/7248.2
=0.86357992

DR Horton Inc's asset turnover of this year was 0.90612438. DR Horton Inc's asset turnover of last year was 0.86357992. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+0+0+0+0+1+0+0+1
=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, Altman Z-Score, Beneish M-Score


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
Q1 1100011111
Q2 0011111000
Q3 1000110100
Q4 0011110000
Q5 0111011010
Q6 0010101101
Q7 0110001000
Q8 1000110110
Q9 1000010111
F-score 4353575543

DR Horton Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 0000000000
Q3 1111000000
Q4 0000000000
Q5 0000010110
Q6 1111101111
Q7 0000000000
Q8 1111111110
Q9 1111111011
F-score 5555444453
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