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

Good Sign:

Piotroski F-Score of 8 is 8, 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 8. 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: 8
Current: 8

3
8

During the past 13 years, the highest Piotroski F-Score of Hewlett-Packard Co was 8. 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 (Jan14) TTM:Last Year (Jan13) TTM:
Net Income was 1425 + 1414 + 1390 + 1077 = $5,306 Mil.
Cash Flow from Operations was 2990 + 2816 + 2674 + 3556 = $12,036 Mil.
Revenue was 28154 + 29131 + 27226 + 27582 = $112,093 Mil.
Gross Profit was 6418 + 6694 + 6367 + 6527 = $26,006 Mil.
Total Assets at the begining of this year (Jan13) was $106,701 Mil.
Total Assets was $105,025 Mil.
Long-Term Debt was $17,971 Mil.
Total Current Assets was $50,684 Mil.
Total Current Liabilities was $43,611 Mil.
Net Income was 1232 + -6854 + -8857 + 1593 = $-12,886 Mil.

Revenue was 28359 + 29959 + 29669 + 30693 = $118,680 Mil.
Gross Profit was 6330 + 7248 + 6849 + 7152 = $27,579 Mil.
Total Assets at the begining of last year (Jan12) was $126,596 Mil.
Total Assets was $106,701 Mil.
Long-Term Debt was $21,752 Mil.
Total Current Assets was $49,552 Mil.
Total Current Liabilities was $44,386 Mil.

Profitability

Q1. 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.

Hewlett-Packard Co's current net income was 5,306. ==> Positive ==> Score 1.

Q2. 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.

Hewlett-Packard Co's current cash flow from operations was 12,036. ==> 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/Total Assets at the beginning of this year (Jan13)
=5306/106701
=0.04972774

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jan12)
=-12886/126596
=-0.10178837

Hewlett-Packard Co's return on assets of this year was 0.04972774. Hewlett-Packard Co's return on assets of last year was -0.10178837. ==> 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 was 5,306. Hewlett-Packard Co's current cash flow from operations was 12,036. ==> 12,036 > 5,306 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=17971/105025
=0.17111164

Gearing (Last Year)=Long-Term Debt/Total Assets
=21752/106701
=0.20385938

Hewlett-Packard Co's gearing of this year was 0.17111164. Hewlett-Packard Co's gearing of last year was 0.20385938. ==> This year is lower. ==> 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)=Total Current Assets/Total Current Liabilities
=50684/43611
=1.16218385

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=49552/44386
=1.11638805

Hewlett-Packard Co's current ratio of this year was 1.16218385. Hewlett-Packard Co's current ratio of last year was 1.11638805. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Hewlett-Packard Co's number of shares in issue this year was 1935. Hewlett-Packard Co's number of shares in issue last year was 1956. ==> There is the same number of shares in issue this year, or fewer. ==> 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)=Gross Profit/Revenue
=26006/112093
=0.23200378

Gross Margin (Last Year)=Gross Profit/Revenue
=27579/118680
=0.23238119

Hewlett-Packard Co's gross margin of this year was 0.23200378. Hewlett-Packard Co's gross margin of last year was 0.23238119. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Jan13)
=112093/106701
=1.05053373

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jan12)
=118680/126596
=0.93747038

Hewlett-Packard Co's asset turnover of this year was 1.05053373. Hewlett-Packard Co's asset turnover of last year was 0.93747038. ==> 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+0+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Hewlett-Packard Co has an F-score of 8. 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.

Hewlett-Packard Co Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1111111101
Q2 1111111111
Q3 1011101001
Q4 1111111111
Q5 1110000001
Q6 0000010011
Q7 1111111111
Q8 0011001000
Q9 1111101001
F-score 7687657448

Hewlett-Packard Co Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Q1 1110000011
Q2 1111111111
Q3 0000000111
Q4 1111111111
Q5 0000001111
Q6 0010110011
Q7 1111111111
Q8 0000011100
Q9 0000000011
F-score 4453455688
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