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Herbalife Ltd (NYSE:HLF)
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

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

HLF' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 5

4
8

During the past 11 years, the highest Piotroski F-Score of Herbalife Ltd was 8. The lowest was 4. 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 own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 123.54 + 74.628 + 119.532 + 11.248 = $329 Mil.
Cash Flow from Operations was 195.891 + 190.649 + 156.934 + 101.914 = $645 Mil.
Revenue was 1268.879 + 1262.649 + 1306.2 + 1256.164 = $5,094 Mil.
Gross Profit was 1017.072 + 1011.484 + 1048.979 + 1001.223 = $4,079 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(2343.447 + 2473.701 + 2856.589 + 2435.684 + 2364.498) / 5 = $2494.7838 Mil.
Total Assets at the begining of this year (Sep13) was $2,343 Mil.
Long-Term Debt was $1,728 Mil.
Total Current Assets was $1,437 Mil.
Total Current Liabilities was $928 Mil.
Net Income was 112.207 + 118.873 + 143.162 + 141.95 = $516 Mil.

Revenue was 1059.32 + 1123.647 + 1219.239 + 1213.543 = $4,616 Mil.
Gross Profit was 848.215 + 897.67 + 972.015 + 975.128 = $3,693 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(1618.097 + 1724.143 + 2109.208 + 2254.003 + 2343.447) / 5 = $2009.7796 Mil.
Total Assets at the begining of last year (Sep12) was $1,618 Mil.
Long-Term Debt was $875 Mil.
Total Current Assets was $1,579 Mil.
Total Current Liabilities was $868 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.

Herbalife Ltd's current net income (TTM) was 329. ==> 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.

Herbalife Ltd's current cash flow from operations (TTM) was 645. ==> 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 (Sep13)
=328.948/2343.447
=0.14036929

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=516.192/1618.097
=0.31901178

Herbalife Ltd's return on assets of this year was 0.14036929. Herbalife Ltd's return on assets of last year was 0.31901178. ==> 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.

Herbalife Ltd's current net income (TTM) was 329. Herbalife Ltd's current cash flow from operations (TTM) was 645. ==> 645 > 329 ==> 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
=1727.919/2494.7838
=0.69261272

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=875.018/2009.7796
=0.43538008

Herbalife Ltd's gearing of this year was 0.69261272. Herbalife Ltd's gearing of last year was 0.43538008. ==> 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
=1436.832/928.034
=1.54825362

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=1578.833/867.963
=1.81900957

Herbalife Ltd's current ratio of this year was 1.54825362. Herbalife Ltd's current ratio of last year was 1.81900957. ==> 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.

Herbalife Ltd's number of shares in issue this year was 86.2. Herbalife Ltd's number of shares in issue last year was 107.8. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=4078.758/5093.892
=0.80071545

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3693.028/4615.749
=0.8000929

Herbalife Ltd's gross margin of this year was 0.80071545. Herbalife Ltd's gross margin of last year was 0.8000929. ==> 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 (Sep13)
=5093.892/2343.447
=2.17367493

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=4615.749/1618.097
=2.85257868

Herbalife Ltd's asset turnover of this year was 2.17367493. Herbalife Ltd's asset turnover of last year was 2.85257868. ==> 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+0+0+1+1+0
=5

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

Herbalife Ltd 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.

Herbalife Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111
Q2 1111111
Q3 1101100
Q4 1111111
Q5 0111000
Q6 0001101
Q7 1110111
Q8 0101100
Q9 0101101
F-score 5858846

Herbalife Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 1100000000
Q4 1111111111
Q5 0000000000
Q6 1101111100
Q7 1111111111
Q8 1100000011
Q9 1101111000
F-score 8846666555
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