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Harley-Davidson Inc (NYSE:HOG)
Piotroski F-Score
6 (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

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

HOG' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 6

2
9

During the past 13 years, the highest Piotroski F-Score of Harley-Davidson Inc was 9. The lowest was 2. 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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 150.066 + 74.475 + 269.854 + 299.81 = $794 Mil.
Cash Flow from Operations was 396.276 + 179.809 + 174.7 + 439.244 = $1,190 Mil.
Revenue was 1301.604 + 1200.157 + 1672.945 + 1824.392 = $5,999 Mil.
Gross Profit was 525.505 + 438.48 + 714.114 + 779.635 = $2,458 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(10076.296 + 10025.506 + 9528.097 + 10263.824 + 10564.872) / 5 = $10091.719 Mil.
Total Assets at the begining of this year (Jun14) was $10,076 Mil.
Long-Term Debt was $4,560 Mil.
Total Current Assets was $4,696 Mil.
Total Current Liabilities was $2,523 Mil.
Net Income was 162.716 + 75.409 + 265.917 + 354.153 = $858 Mil.

Revenue was 1343.718 + 1190.634 + 1726.048 + 2000.699 = $6,261 Mil.
Gross Profit was 539.805 + 443.6 + 707.634 + 849.812 = $2,541 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(9707.198 + 9484.008 + 9405.04 + 9729.791 + 10076.296) / 5 = $9680.4666 Mil.
Total Assets at the begining of last year (Jun13) was $9,707 Mil.
Long-Term Debt was $3,794 Mil.
Total Current Assets was $4,374 Mil.
Total Current Liabilities was $2,454 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.

Harley-Davidson Inc's current net income (TTM) was 794. ==> 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.

Harley-Davidson Inc's current cash flow from operations (TTM) was 1,190. ==> 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 (Jun14)
=794.205/10076.296
=0.07881914

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=858.195/9707.198
=0.08840811

Harley-Davidson Inc's return on assets of this year was 0.07881914. Harley-Davidson Inc's return on assets of last year was 0.08840811. ==> Last year is higher ==> Score 0.

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.

Harley-Davidson Inc's current net income (TTM) was 794. Harley-Davidson Inc's current cash flow from operations (TTM) was 1,190. ==> 1,190 > 794 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=4560.349/10091.719
=0.45189021

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=3794.396/9680.4666
=0.39196416

Harley-Davidson Inc's gearing of this year was 0.45189021. Harley-Davidson Inc's gearing of last year was 0.39196416. ==> Last year is lower than this year ==> Score 0.

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: Jun15)=Total Current Assets/Total Current Liabilities
=4696.39/2522.724
=1.86163449

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=4373.698/2453.648
=1.78252871

Harley-Davidson Inc's current ratio of this year was 1.86163449. Harley-Davidson Inc's current ratio of last year was 1.78252871. ==> This year's current ratio is higher. ==> Score 1.

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.

Harley-Davidson Inc's number of shares in issue this year was 208.6. Harley-Davidson Inc's number of shares in issue last year was 219.2. ==> 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
=2457.734/5999.098
=0.40968392

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2540.851/6261.099
=0.4058155

Harley-Davidson Inc's gross margin of this year was 0.40968392. Harley-Davidson Inc's gross margin of last year was 0.4058155. ==> 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 (Jun14)
=5999.098/10076.296
=0.59536738

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=6261.099/9707.198
=0.6449955

Harley-Davidson Inc's asset turnover of this year was 0.59536738. Harley-Davidson Inc's asset turnover of last year was 0.6449955. ==> 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+0+1+0+1+1+1+0
=6

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

Harley-Davidson 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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Harley-Davidson Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111011111
Question 2 1110111111
Question 3 0100011111
Question 4 1000111111
Question 5 0100011010
Question 6 1001010101
Question 7 1111001111
Question 8 1001010111
Question 9 0100001111
F-score 6634277888

Harley-Davidson Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 1111111111
Question 2 1111111111
Question 3 1011111110
Question 4 1111111111
Question 5 1011111000
Question 6 1110000111
Question 7 1111111111
Question 8 1111111111
Question 9 1111111100
F-score 9798888876
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