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Health Net Inc (NYSE:HNT)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

Health Net Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

HNT' s 10-Year Piotroski F-Score Range
Min: 1   Max: 9
Current: 6

1
9

During the past 13 years, the highest Piotroski F-Score of Health Net Inc was 9. The lowest was 1. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 66.84 + 19.753 + 28.787 + 120.867 = $236 Mil.
Cash Flow from Operations was 302.195 + -71.886 + 311.458 + -13.75 = $528 Mil.
Revenue was 2775.031 + 2743.244 + 3038.935 + 3421.392 = $11,979 Mil.
Gross Profit was 453.136 + 389.203 + 504.619 + 525.005 = $1,872 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(3881.453 + 4041.501 + 3929.125 + 4430.619 + 4777.025) / 5 = $4,212 Mil.
Total Assets was $4,777 Mil.
Long-Term Debt was $499 Mil.
Total Current Assets was $3,839 Mil.
Total Current Liabilities was $2,210 Mil.
Net Income was 18.028 + 6.011 + 50.05 + 33.483 = $108 Mil.

Revenue was 2779.572 + 2837.782 + 2797.037 + 2738.431 = $11,153 Mil.
Gross Profit was 346.369 + 367.428 + 402.826 + 419.113 = $1,536 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(4033.452 + 3810.303 + 3934.39 + 3875.307 + 3881.453) / 5 = $3,907 Mil.
Total Assets was $3,881 Mil.
Long-Term Debt was $524 Mil.
Total Current Assets was $2,948 Mil.
Total Current Liabilities was $1,606 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Health Net Inc's current net income (ttm) was 236. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Health Net Inc's current cash flow from operations (ttm) was 528. ==> 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)/Average Total Assets from Jun13 to Jun14
=236.247/4211.9446
=0.05608977

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=107.572/3906.981
=0.02753328

Health Net Inc's return on assets of this year was 0.05608977. Health Net Inc's return on assets of last year was 0.02753328. ==> 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.

Health Net Inc's current net income (ttm) was 236. Health Net Inc's current cash flow from operations (ttm) was 528. ==> 528 > 236 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=499.402/4777.025
=0.10454247

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=524.197/3881.453
=0.13505174

Health Net Inc's gearing of this year was 0.10454247. Health Net Inc's gearing of last year was 0.13505174. ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=3839.138/2209.771
=1.73734654

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=2948.138/1606.169
=1.83550921

Health Net Inc's current ratio of this year was 1.73734654. Health Net Inc's current ratio of last year was 1.83550921. ==> 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.

Health Net Inc's number of shares in issue this year was 81.2. Health Net Inc's number of shares in issue last year was 80.1. ==> 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
=1871.963/11978.602
=0.15627558

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1535.736/11152.822
=0.13769932

Health Net Inc's gross margin of this year was 0.15627558. Health Net Inc's gross margin of last year was 0.13769932. ==> 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 average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=11978.602/4211.9446
=2.84396001

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=11152.822/3906.981
=2.85458824

Health Net Inc's asset turnover of this year was 2.84396001. Health Net Inc's asset turnover of last year was 2.85458824. ==> 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+1+0+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Health Net Inc has an F-score of 6 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.

Health Net Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111101111
Q2 0111011111
Q3 0110001011
Q4 0001011100
Q5 1110011010
Q6 0101111100
Q7 1001111111
Q8 0111011101
Q9 0011110011
F-score 3667478666

Health Net Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1101101111
Q3 1111100101
Q4 1100001011
Q5 0011001011
Q6 1110110000
Q7 1111111100
Q8 1000011111
Q9 0000100000
F-score 7655646556
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