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Hewlett-Packard Co (NYSE:HPQ)
Piotroski F-Score
9 (As of Today)

Good Sign:

Piotroski F-Score of 9 is 9, indicating very healthy situation.

The zones of discrimination were as such:

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

Hewlett-Packard Co has an F-score of 9. It is a good or high score, which usually indicates a very healthy situation.

HPQ' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 9

3
9

During the past 13 years, the highest Piotroski F-Score of Hewlett-Packard Co was 9. The lowest was 3. 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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was 1425 + 1273 + 985 + 1330 = $5,013 Mil.
Cash Flow from Operations was 2990 + 2995 + 3647 + 2701 = $12,333 Mil.
Revenue was 28154 + 27309 + 27585 + 28406 = $111,454 Mil.
Gross Profit was 6418 + 6605 + 6611 + 6981 = $26,615 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(105676 + 105025 + 103972 + 103170 + 103206) / 5 = $104,210 Mil.
Total Assets as of Oct13 was $105,676 Mil.
Long-Term Debt was $16,039 Mil.
Total Current Assets was $50,145 Mil.
Total Current Liabilities was $43,735 Mil.
Net Income was 1232 + 1077 + 1390 + 1414 = $5,113 Mil.

Revenue was 28359 + 27582 + 27226 + 29131 = $112,298 Mil.
Gross Profit was 6330 + 6527 + 6367 + 6694 = $25,918 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(108768 + 106701 + 106254 + 105800 + 105676) / 5 = $106,640 Mil.
Total Assets as of Oct12 was $108,768 Mil.
Long-Term Debt was $16,608 Mil.
Total Current Assets was $50,364 Mil.
Total Current Liabilities was $45,521 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

Hewlett-Packard Co's current net income (ttm) was 5,013. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

Hewlett-Packard Co's current cash flow from operations (ttm) was 12,333. ==> 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)/Beginning of This Year Total Assets (Oct13)
=5013/105676
=0.04743745

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Oct12)
=5113/108768
=0.04700831

Hewlett-Packard Co's return on assets of this year was 0.04743745. Hewlett-Packard Co's return on assets of last year was 0.04700831. ==> 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.

Hewlett-Packard Co's current net income (ttm) was 5,013. Hewlett-Packard Co's current cash flow from operations (ttm) was 12,333. ==> 12,333 > 5,013 ==> 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: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=16039/104209.8
=0.15391067

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=16608/106639.8
=0.15573923

Hewlett-Packard Co's gearing of this year was 0.15391067. Hewlett-Packard Co's gearing of last year was 0.15573923. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=50145/43735
=1.14656454

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=50364/45521
=1.10639046

Hewlett-Packard Co's current ratio of this year was 1.14656454. Hewlett-Packard Co's current ratio of last year was 1.10639046. ==> This year's current ratio is higher. ==> Score 1.

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.

Hewlett-Packard Co's number of shares in issue this year was 1896. Hewlett-Packard Co's number of shares in issue last year was 1944. ==> 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
=26615/111454
=0.23879807

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=25918/112298
=0.23079663

Hewlett-Packard Co's gross margin of this year was 0.23879807. Hewlett-Packard Co's gross margin of last year was 0.23079663. ==> 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 begining of the year total assets) 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)/Beginning of This Year Total Assets (Oct13)
=111454/105676
=1.05467656

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Oct12)
=112298/108768
=1.0324544

Hewlett-Packard Co's asset turnover of this year was 1.05467656. Hewlett-Packard Co's asset turnover of last year was 1.0324544. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+1+1+1+1
=9

Good or high score = 8 or 9

Bad or low score = 0 or 1

Hewlett-Packard Co has an F-score of 9. 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, 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.

Hewlett-Packard Co Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Q1 1111111011
Q2 1111111111
Q3 0111010011
Q4 1111111111
Q5 1100000011
Q6 0000100111
Q7 1111111111
Q8 0110010001
Q9 1111010011
F-score 6876574489

Hewlett-Packard Co Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 0000011111
Q2 1111111111
Q3 0000111111
Q4 1111111111
Q5 0111111101
Q6 0110011111
Q7 1111111111
Q8 0011100111
Q9 0000011111
F-score 3565688989
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