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Guidewire Software Inc (NYSE:GWRE)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

Guidewire Software Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.

GWRE' s 10-Year Piotroski F-Score Range
Min: 5   Max: 7
Current: 7

5
7

During the past 6 years, the highest Piotroski F-Score of Guidewire Software Inc was 7. 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 (Jul14) TTM:Last Year (Jul13) TTM:
Net Income was -10.615 + -0.892 + -1.358 + 27.586 = $14.7 Mil.
Cash Flow from Operations was -14.583 + 20.312 + 20.324 + 49.438 = $75.5 Mil.
Revenue was 66.529 + 83.475 + 82.035 + 118.207 = $350.2 Mil.
Gross Profit was 26.609 + 44.754 + 44.693 + 85.243 = $201.3 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Jul14) was
(312.27 + 693.048 + 716.291 + 733.708 + 757.227) / 5 = $642.5 Mil.
Total Assets as of Jul13 was $312.3 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $516.4 Mil.
Total Current Liabilities was $95.4 Mil.
Net Income was 0.447 + 5.501 + -2.67 + 12.105 = $15.4 Mil.

Revenue was 63.301 + 72.188 + 68.25 + 96.91 = $300.6 Mil.
Gross Profit was 35.744 + 40.8 + 32.258 + 60.104 = $168.9 Mil.
Average Total Assets from the begining of last year (Jul12)
to the end of last year (Jul13) was
(284.247 + 267.741 + 288.688 + 299.165 + 312.27) / 5 = $290.4 Mil.
Total Assets as of Jul12 was $284.2 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $210.1 Mil.
Total Current Liabilities was $74.8 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.

Guidewire Software Inc's current net income (ttm) was 14.7. ==> 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.

Guidewire Software Inc's current cash flow from operations (ttm) was 75.5. ==> 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)/Beginning of This Year Total Assets (Jul13)
=14.721/312.27
=0.0471419

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Jul12)
=15.383/284.247
=0.05411843

Guidewire Software Inc's return on assets of this year was 0.0471419. Guidewire Software Inc's return on assets of last year was 0.05411843. ==> 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 14.7. Guidewire Software Inc's current cash flow from operations (ttm) was 75.5. ==> 75.5 > 14.7 ==> 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: Jul14)=Long-Term Debt/Average Total Assets from Jul13 to Jul14
=0/642.5088
=0

Gearing (Last Year: Jul13)=Long-Term Debt/Average Total Assets from Jul12 to Jul13
=0/290.4222
=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: Jul14)=Total Current Assets/Total Current Liabilities
=516.43/95.386
=5.41410689

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=210.093/74.784
=2.80933087

Guidewire Software Inc's current ratio of this year was 5.41410689. Guidewire Software Inc's current ratio of last year was 2.80933087. ==> 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.

Guidewire Software Inc's number of shares in issue this year was 82.3. Guidewire Software Inc's number of shares in issue last year was 61.1. ==> 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
=201.299/350.246
=0.57473604

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=168.906/300.649
=0.56180463

Guidewire Software Inc's gross margin of this year was 0.57473604. Guidewire Software Inc's gross margin of last year was 0.56180463. ==> 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 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 (Jul13)
=350.246/312.27
=1.12161271

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Jul12)
=300.649/284.247
=1.05770334

Guidewire Software Inc's asset turnover of this year was 1.12161271. Guidewire Software Inc's asset turnover of last year was 1.05770334. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+1+0+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Guidewire Software Inc has an F-score of 7 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.

Guidewire Software Inc Annual Data

Jul09Jul10Jul11Jul12Jul13Jul14
Q1 11
Q2 11
Q3 00
Q4 11
Q5 11
Q6 01
Q7 00
Q8 01
Q9 01
F-score 47

Guidewire Software Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Q1 111001
Q2 111111
Q3 000000
Q4 111111
Q5 111111
Q6 001111
Q7 111000
Q8 000001
Q9 000111
F-score 0000556557
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