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Guidewire Software Inc (NYSE:GWRE)
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

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

GWRE' s 10-Year Piotroski F-Score Range
Min: 5   Max: 8
Current: 5

5
8

During the past 6 years, the highest Piotroski F-Score of Guidewire Software Inc was 8. The lowest was 5. And the median was 6.


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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was -0.892 + -1.358 + 27.586 + -2.997 = $22.3 Mil.
Cash Flow from Operations was 20.312 + 20.324 + 49.438 + -5.548 = $84.5 Mil.
Revenue was 83.475 + 82.035 + 118.207 + 79.734 = $363.5 Mil.
Gross Profit was 44.754 + 44.693 + 85.243 + 43.963 = $218.7 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(693.048 + 716.291 + 733.708 + 757.227 + 731.782) / 5 = $726.4112 Mil.
Total Assets at the begining of this year (Oct13) was $693.0 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $563.3 Mil.
Total Current Liabilities was $73.9 Mil.
Net Income was 5.501 + -2.67 + 21.38 + -6.455 = $17.8 Mil.

Revenue was 72.188 + 68.25 + 96.91 + 66.529 = $303.9 Mil.
Gross Profit was 40.8 + 32.258 + 66.196 + 28.672 = $167.9 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(267.741 + 288.688 + 299.165 + 305.673 + 693.048) / 5 = $370.863 Mil.
Total Assets at the begining of last year (Oct12) was $267.7 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $587.1 Mil.
Total Current Liabilities was $67.0 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.

Guidewire Software Inc's current net income (TTM) was 22.3. ==> 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.

Guidewire Software Inc's current cash flow from operations (TTM) was 84.5. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Oct13)
=22.339/693.048
=0.03223298

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=17.756/267.741
=0.06631782

Guidewire Software Inc's return on assets of this year was 0.03223298. Guidewire Software Inc's return on assets of last year was 0.06631782. ==> 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.

Guidewire Software Inc's current net income (TTM) was 22.3. Guidewire Software Inc's current cash flow from operations (TTM) was 84.5. ==> 84.5 > 22.3 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=0/726.4112
=0

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=0/370.863
=0

Guidewire Software Inc's gearing of this year was 0. Guidewire Software Inc's gearing of last year was 0. ==> This year is lower or equal to last year. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=563.328/73.891
=7.62377015

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=587.131/66.977
=8.76615853

Guidewire Software Inc's current ratio of this year was 7.62377015. Guidewire Software Inc's current ratio of last year was 8.76615853. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

Guidewire Software Inc's number of shares in issue this year was 69.3. Guidewire Software Inc's number of shares in issue last year was 58.6. ==> 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
=218.653/363.451
=0.60160242

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=167.926/303.877
=0.55261175

Guidewire Software Inc's gross margin of this year was 0.60160242. Guidewire Software Inc's gross margin of last year was 0.55261175. ==> This year's gross margin is higher. ==> Score 1.

Q9. 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 (Oct13)
=363.451/693.048
=0.52442399

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=303.877/267.741
=1.13496625

Guidewire Software Inc's asset turnover of this year was 0.52442399. Guidewire Software Inc's asset turnover of last year was 1.13496625. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+0+0+1+0
=5

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

Guidewire Software 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 own currency.

Guidewire Software Inc Annual Data

Jul09Jul10Jul11Jul12Jul13Jul14
Q1 11
Q2 11
Q3 00
Q4 11
Q5 11
Q6 01
Q7 00
Q8 00
Q9 01
F-score 46

Guidewire Software Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 1111111
Q2 1111111
Q3 0000100
Q4 1111111
Q5 1111111
Q6 0011110
Q7 1110000
Q8 0000101
Q9 0001110
F-score 0005566865
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