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Herbalife Ltd (NYSE:HLF)
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 = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Herbalife Ltd has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

HLF' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Max: 8
Current: 7

4
8

During the past 13 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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 78.2 + 82.8 + 93.6 + 84.5 = $339 Mil.
Cash Flow from Operations was 161.1 + 197.6 + 134.5 + 135.5 = $629 Mil.
Revenue was 1105.4 + 1162.3 + 1102.9 + 1098.4 = $4,469 Mil.
Gross Profit was 890 + 933 + 896 + 894 = $3,613 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(2355 + 2388.9 + 2415.1 + 2421.5 + 2477.9) / 5 = $2411.68 Mil.
Total Assets at the begining of this year (Dec14) was $2,355 Mil.
Long-Term Debt was $1,393 Mil.
Total Current Assets was $1,566 Mil.
Total Current Liabilities was $1,024 Mil.
Net Income was 74.6 + 119.5 + 11.2 + 103.3 = $309 Mil.

Revenue was 1262.6 + 1306.2 + 1256.2 + 1133.6 = $4,959 Mil.
Gross Profit was 1011.4 + 1049 + 1001.2 + 914 = $3,976 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(2473.7 + 2856.589 + 2435.684 + 2364.498 + 2355) / 5 = $2497.0942 Mil.
Total Assets at the begining of last year (Dec13) was $2,474 Mil.
Long-Term Debt was $1,692 Mil.
Total Current Assets was $1,393 Mil.
Total Current Liabilities was $875 Mil.

Profitability

Question 1. 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 339. ==> Positive ==> Score 1.

Question 2. 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 629. ==> Positive ==> Score 1.

Question 3. 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 (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=308.6/2473.7
=0.1247524

Herbalife Ltd's return on assets of this year was 0.14399151. Herbalife Ltd's return on assets of last year was 0.1247524. ==> This year is higher. ==> Score 1.

Question 4. 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 339. Herbalife Ltd's current cash flow from operations (TTM) was 629. ==> 629 > 339 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=1392.5/2411.68
=0.57739833

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=1691.8/2497.0942
=0.67750748

Herbalife Ltd's gearing of this year was 0.57739833. Herbalife Ltd's gearing of last year was 0.67750748. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Dec15)=Total Current Assets/Total Current Liabilities
=1566.3/1024.4
=1.52899258

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=1393.4/874.8
=1.59282122

Herbalife Ltd's current ratio of this year was 1.52899258. Herbalife Ltd's current ratio of last year was 1.59282122. ==> Last year's current ratio is higher ==> Score 0.

Question 7. 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 85.3. Herbalife Ltd's number of shares in issue last year was 90.8. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. 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
=3613/4469
=0.80845827

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3975.6/4958.6
=0.80175856

Herbalife Ltd's gross margin of this year was 0.80845827. Herbalife Ltd's gross margin of last year was 0.80175856. ==> This year's gross margin is higher. ==> Score 1.

Question 9. 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 (Dec14)
=4469/2355
=1.89766454

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=4958.6/2473.7
=2.00452763

Herbalife Ltd's asset turnover of this year was 1.89766454. Herbalife Ltd's asset turnover of last year was 2.00452763. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+1+0+1+1+0
=7

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

Herbalife Ltd has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1110110001
Question 4 1111111111
Question 5 1011100001
Question 6 1000110100
Question 7 0111011111
Question 8 0010110011
Question 9 1010110100
F-score 7585884657

Herbalife Ltd Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000011
Question 4 1111111111
Question 5 0000001111
Question 6 1110000000
Question 7 1111111111
Question 8 0001111111
Question 9 1100000000
F-score 6655556677
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