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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 12 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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 103.3 + 78.2 + 82.8 + 93.6 = $358 Mil.
Cash Flow from Operations was 61.9 + 161.1 + 197.6 + 134.5 = $555 Mil.
Revenue was 1133.6 + 1105.4 + 1162.3 + 1102.9 = $4,504 Mil.
Gross Profit was 914 + 890 + 933 + 896 = $3,633 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(2364.498 + 2374.9 + 2388.9 + 2415.1 + 2421.5) / 5 = $2392.9796 Mil.
Total Assets at the begining of this year (Sep14) was $2,364 Mil.
Long-Term Debt was $1,399 Mil.
Total Current Assets was $1,492 Mil.
Total Current Liabilities was $1,031 Mil.
Net Income was 123.515 + 74.6 + 119.5 + 11.2 = $329 Mil.

Revenue was 1268.871 + 1262.6 + 1306.2 + 1256.2 = $5,094 Mil.
Gross Profit was 1017.087 + 1011.4 + 1049 + 1001.2 = $4,079 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(2343.447 + 2473.7 + 2856.589 + 2435.684 + 2364.498) / 5 = $2494.7836 Mil.
Total Assets at the begining of last 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.

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 358. ==> 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 555. ==> 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 (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Sep14)
=357.9/2364.498
=0.15136405

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=328.815/2343.447
=0.14031254

Herbalife Ltd's return on assets of this year was 0.15136405. Herbalife Ltd's return on assets of last year was 0.14031254. ==> 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 358. Herbalife Ltd's current cash flow from operations (TTM) was 555. ==> 555 > 358 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=1398.7/2392.9796
=0.58450143

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=1727.919/2494.7836
=0.69261278

Herbalife Ltd's gearing of this year was 0.58450143. Herbalife Ltd's gearing of last year was 0.69261278. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=1492.1/1030.5
=1.44793789

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=1436.832/928.034
=1.54825362

Herbalife Ltd's current ratio of this year was 1.44793789. Herbalife Ltd's current ratio of last year was 1.54825362. ==> 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 85.7. Herbalife Ltd's number of shares in issue last year was 86.2. ==> 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
=3633/4504.2
=0.80658052

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=4078.687/5093.871
=0.80070481

Herbalife Ltd's gross margin of this year was 0.80658052. Herbalife Ltd's gross margin of last year was 0.80070481. ==> 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 (Sep14)
=4504.2/2364.498
=1.90492866

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=5093.871/2343.447
=2.17366597

Herbalife Ltd's asset turnover of this year was 1.90492866. Herbalife Ltd's asset turnover of last year was 2.17366597. ==> 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1111011000
Question 4 1111111111
Question 5 1101110000
Question 6 1100011010
Question 7 0011101111
Question 8 1001011001
Question 9 1101011010
F-score 8758588465

Herbalife Ltd Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000001
Question 4 1111111111
Question 5 0000000111
Question 6 1111000000
Question 7 1111111111
Question 8 0000111111
Question 9 1110000000
F-score 6665555667
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