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HCP Inc (NYSE:HCP)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

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

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

HCP' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of HCP Inc was 8. 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 293.095 + 259.111 + 218.885 + 247.654 = $1,019 Mil.
Cash Flow from Operations was 305.307 + 247.181 + 360.524 + 275.317 = $1,188 Mil.
Revenue was 530.297 + 529.992 + 536.121 + 596.638 = $2,193 Mil.
Gross Profit was 454.005 + 454.285 + 457.254 + 497.039 = $1,863 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(19889.509 + 20075.87 + 19858.678 + 20144.169 + 20744.89) / 5 = $20,143 Mil.
Total Assets as of Sep13 was $19,890 Mil.
Long-Term Debt was $9,215 Mil.
Total Current Assets was $591 Mil.
Total Current Liabilities was $406 Mil.
Net Income was 241.028 + 230.585 + 213.401 + 233.756 = $919 Mil.

Revenue was 508.971 + 511.186 + 512.239 + 546.157 = $2,079 Mil.
Gross Profit was 438.289 + 438.5 + 438.352 + 470.74 = $1,786 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(18079.336 + 19915.555 + 19732.731 + 20051.793 + 19889.509) / 5 = $19,534 Mil.
Total Assets as of Sep12 was $18,079 Mil.
Long-Term Debt was $8,561 Mil.
Total Current Assets was $516 Mil.
Total Current Liabilities was $376 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.

HCP Inc's current net income (ttm) was 1,019. ==> 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.

HCP Inc's current cash flow from operations (ttm) was 1,188. ==> 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 (Sep13)
=1018.745/19889.509
=0.05122022

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Sep12)
=918.77/18079.336
=0.05081879

HCP Inc's return on assets of this year was 0.05122022. HCP Inc's return on assets of last year was 0.05081879. ==> 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.

HCP Inc's current net income (ttm) was 1,019. HCP Inc's current cash flow from operations (ttm) was 1,188. ==> 1,188 > 1,019 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=9214.637/20142.6232
=0.45746956

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=8560.592/19533.7848
=0.43824543

HCP Inc's gearing of this year was 0.45746956. HCP Inc's gearing of last year was 0.43824543. ==> 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
=591.467/405.589
=1.45829152

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=515.784/375.621
=1.37315006

HCP Inc's current ratio of this year was 1.45829152. HCP Inc's current ratio of last year was 1.37315006. ==> 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.

HCP Inc's number of shares in issue this year was 459.1. HCP Inc's number of shares in issue last year was 456.1. ==> 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
=1862.583/2193.048
=0.84931246

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1785.881/2078.553
=0.85919435

HCP Inc's gross margin of this year was 0.84931246. HCP Inc's gross margin of last year was 0.85919435. ==> 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)
=2193.048/19889.509
=0.11026155

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Sep12)
=2078.553/18079.336
=0.11496844

HCP Inc's asset turnover of this year was 0.11026155. HCP Inc's asset turnover of last year was 0.11496844. ==> 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+0+1+0+0+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

HCP 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, 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.

HCP Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1110001111
Q4 1100111111
Q5 1000111011
Q6 0001011011
Q7 0000000000
Q8 0000110101
Q9 1110111100
F-score 6543677667

HCP Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 0011111111
Q4 1111111111
Q5 1100011110
Q6 1110011111
Q7 0000000000
Q8 0000111110
Q9 0001110000
F-score 5555687775
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