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First Solar, Inc. (NAS:FSLR)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

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

FSLR' s 10-Year Piotroski F-Score Range
Min: 2   Max: 7
Current: 6

2
7

During the past 13 years, the highest Piotroski F-Score of First Solar, Inc. was 7. The lowest was 2. 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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 65.26 + 195.038 + 33.598 + 59.142 = $353 Mil.
Cash Flow from Operations was 192.206 + 375.092 + 222.373 + 66.455 = $856 Mil.
Revenue was 768.437 + 1265.587 + 519.76 + 755.205 = $3,309 Mil.
Gross Profit was 189.296 + 364.034 + 140.098 + 169.326 = $863 Mil.
Total Assets at the begining of this year (Dec12) was $6,349 Mil.
Total Assets was $6,884 Mil.
Long-Term Debt was $163 Mil.
Total Current Assets was $3,793 Mil.
Total Current Liabilities was $1,588 Mil.
Net Income was 154.178 + 87.917 + 110.983 + -449.416 = $-96 Mil.

Revenue was 1075.011 + 839.147 + 957.332 + 497.055 = $3,369 Mil.
Gross Profit was 293.547 + 238.716 + 243.741 + 76.745 = $853 Mil.
Total Assets at the begining of last year (Dec11) was $5,778 Mil.
Total Assets was $6,349 Mil.
Long-Term Debt was $500 Mil.
Total Current Assets was $2,832 Mil.
Total Current Liabilities was $1,101 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.

First Solar, Inc.'s current net income was 353. ==> 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.

First Solar, Inc.'s current cash flow from operations was 856. ==> Positive ==> Score 1.

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 (Dec12)
=353.038/6348.692
=0.05560799

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=-96.338/5777.614
=-0.01667436

First Solar, Inc.'s return on assets of this year was 0.05560799. First Solar, Inc.'s return on assets of last year was -0.01667436. ==> This year is higher. ==> Score 1.

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.

First Solar, Inc.'s current net income was 353. First Solar, Inc.'s current cash flow from operations was 856. ==> 856 > 353 ==> CFROA > ROA ==> Score 1.

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
=162.78/6883.502
=0.02364785

Gearing (Last Year)=Long-Term Debt/Total Assets
=500.223/6348.692
=0.07879151

First Solar, Inc.'s gearing of this year was 0.02364785. First Solar, Inc.'s gearing of last year was 0.07879151. ==> This year is lower. ==> Score 1.

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
=3792.764/1588.061
=2.38829869

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2832.324/1101.374
=2.5716278

First Solar, Inc.'s current ratio of this year was 2.38829869. First Solar, Inc.'s current ratio of last year was 2.5716278. ==> Last year's current ratio is higher ==> Score 0.

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.

First Solar, Inc.'s number of shares in issue this year was 101.3. First Solar, Inc.'s number of shares in issue last year was 87.1. ==> 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
=862.754/3308.989
=0.26073039

Gross Margin (Last Year)=Gross Profit/Revenue
=852.749/3368.545
=0.25315054

First Solar, Inc.'s gross margin of this year was 0.26073039. First Solar, Inc.'s gross margin of last year was 0.25315054. ==> 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 (Dec12)
=3308.989/6348.692
=0.52120799

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=3368.545/5777.614
=0.58303393

First Solar, Inc.'s asset turnover of this year was 0.52120799. First Solar, Inc.'s asset turnover of last year was 0.58303393. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+0+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

First Solar, 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.

First Solar, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 11111001
Q2 01111011
Q3 11010001
Q4 01111111
Q5 11010011
Q6 10010000
Q7 00000100
Q8 11100001
Q9 10110000
F-score 66573236

First Solar, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1000001111
Q2 1001111111
Q3 0000001111
Q4 0111111111
Q5 0000111111
Q6 0000000000
Q7 0110000000
Q8 0000000011
Q9 0000001010
F-score 2222336576
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