Switch to:
GuruFocus has detected 4 Warning Signs with Equifax Inc $EFX.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Equifax Inc (NYSE:EFX)
Piotroski F-Score
5 (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

Equifax Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

EFX' s Piotroski F-Score Range Over the Past 10 Years
Min: 5   Max: 8
Current: 5

5
8

During the past 13 years, the highest Piotroski F-Score of Equifax Inc was 8. The lowest was 5. And the median was 7.


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 102.1 + 130.9 + 132.8 + 123 = $489 Mil.
Cash Flow from Operations was 90.3 + 189.2 + 245 + 271.3 = $796 Mil.
Revenue was 728.3 + 811.3 + 804.1 + 801.1 = $3,145 Mil.
Gross Profit was 475 + 525.5 + 516.1 + 514.8 = $2,031 Mil.
Average Total Assets from the begining of this year (Dec15)
to the end of this year (Dec16) was
(4501.5 + 6732.9 + 6640.8 + 6806.6 + 6664) / 5 = $6269.16 Mil.
Total Assets at the begining of this year (Dec15) was $4,502 Mil.
Long-Term Debt was $2,087 Mil.
Total Current Assets was $673 Mil.
Total Current Liabilities was $1,260 Mil.
Net Income was 88.3 + 111 + 117.9 + 111.9 = $429 Mil.

Revenue was 651.8 + 678.1 + 667.4 + 666.3 = $2,664 Mil.
Gross Profit was 436.7 + 457.3 + 440.9 + 441.3 = $1,776 Mil.
Average Total Assets from the begining of last year (Dec14)
to the end of last year (Dec15) was
(4661 + 4595 + 4585.5 + 4541.4 + 4501.5) / 5 = $4576.88 Mil.
Total Assets at the begining of last year (Dec14) was $4,661 Mil.
Long-Term Debt was $1,138 Mil.
Total Current Assets was $562 Mil.
Total Current Liabilities was $604 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.

Equifax Inc's current net income (TTM) was 489. ==> 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.

Equifax Inc's current cash flow from operations (TTM) was 796. ==> 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)
=488.8/4501.5
=0.10858603

Equifax Inc's return on assets of this year was 0.10858603. Equifax Inc's return on assets of last year was 0.09206179. ==> 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.

Equifax Inc's current net income (TTM) was 489. Equifax Inc's current cash flow from operations (TTM) was 796. ==> 796 > 489 ==> CFROA > ROA ==> Score 1.

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
=2086.8/6269.16
=0.33286756

Gearing (Last Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=1138.4/4576.88
=0.24872839

Equifax Inc's gearing of this year was 0.33286756. Equifax Inc's gearing of last year was 0.24872839. ==> Last year is lower than this year ==> Score 0.

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
=672.9/1259.6
=0.53421721

Current Ratio (Last Year: Dec15)=Total Current Assets/Total Current Liabilities
=561.6/603.8
=0.93010931

Equifax Inc's current ratio of this year was 0.53421721. Equifax Inc's current ratio of last year was 0.93010931. ==> 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.

Equifax Inc's number of shares in issue this year was 121.1. Equifax Inc's number of shares in issue last year was 120.9. ==> 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
=2031.4/3144.8
=0.64595523

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1776.2/2663.6
=0.66684187

Equifax Inc's gross margin of this year was 0.64595523. Equifax Inc's gross margin of last year was 0.66684187. ==> 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 (Dec15)
=3144.8/4501.5
=0.69861157

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=2663.6/4661
=0.57146535

Equifax Inc's asset turnover of this year was 0.69861157. Equifax Inc's asset turnover of last year was 0.57146535. ==> 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+1+0+0+0+0+1
=5

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

Equifax Inc 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 local exchange's currency.

Equifax Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 1111111111
Question 2 1111111111
Question 3 1001011111
Question 4 1111111111
Question 5 0110101100
Question 6 1101001010
Question 7 0111110110
Question 8 0001111010
Question 9 1000110111
F-score 6657777785

Equifax Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Question 1 1111111111
Question 2 1111111111
Question 3 0111111111
Question 4 1111111111
Question 5 1111000000
Question 6 0011110000
Question 7 1111111000
Question 8 1011111000
Question 9 0101111111
F-score 6789887555
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK