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Heartland Payment Systems Inc (NYSE:HPY)
Piotroski F-Score
5 (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

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

HPY' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 7
Current: 5

3
7

During the past 13 years, the highest Piotroski F-Score of Heartland Payment Systems Inc was 7. The lowest was 3. And the median was 5.


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 -19.771 + 17.238 + 20.906 + 23.881 = $42 Mil.
Cash Flow from Operations was 41.469 + 20.951 + 56.381 + 62.529 = $181 Mil.
Revenue was 604.613 + 602.459 + 675.692 + 705.667 = $2,588 Mil.
Gross Profit was 86.094 + 87.886 + 95.3 + 101.73 = $371 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(1336.764 + 1387.773 + 1474.961 + 1463.432 + 1452.739) / 5 = $1423.1338 Mil.
Total Assets at the begining of this year (Sep14) was $1,337 Mil.
Long-Term Debt was $450 Mil.
Total Current Assets was $527 Mil.
Total Current Liabilities was $577 Mil.
Net Income was 17.405 + 15.74 + 17.452 + 20.458 = $71 Mil.

Revenue was 530.38 + 523.283 + 582.859 + 600.626 = $2,237 Mil.
Gross Profit was 73.447 + 70.848 + 73.305 + 79.792 = $297 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(859.213 + 900.305 + 931.284 + 933.96 + 1336.764) / 5 = $992.3052 Mil.
Total Assets at the begining of last year (Sep13) was $859 Mil.
Long-Term Debt was $554 Mil.
Total Current Assets was $486 Mil.
Total Current Liabilities was $429 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.

Heartland Payment Systems Inc's current net income (TTM) was 42. ==> 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.

Heartland Payment Systems Inc's current cash flow from operations (TTM) was 181. ==> 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)
=42.254/1336.764
=0.03160917

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=71.055/859.213
=0.08269777

Heartland Payment Systems Inc's return on assets of this year was 0.03160917. Heartland Payment Systems Inc's return on assets of last year was 0.08269777. ==> 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.

Heartland Payment Systems Inc's current net income (TTM) was 42. Heartland Payment Systems Inc's current cash flow from operations (TTM) was 181. ==> 181 > 42 ==> 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
=450.041/1423.1338
=0.31623239

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=553.75/992.3052
=0.55804404

Heartland Payment Systems Inc's gearing of this year was 0.31623239. Heartland Payment Systems Inc's gearing of last year was 0.55804404. ==> 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
=527.055/576.648
=0.91399779

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=485.694/428.765
=1.13277436

Heartland Payment Systems Inc's current ratio of this year was 0.91399779. Heartland Payment Systems Inc's current ratio of last year was 1.13277436. ==> 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.

Heartland Payment Systems Inc's number of shares in issue this year was 37.2. Heartland Payment Systems Inc's number of shares in issue last year was 37.2. ==> 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
=371.01/2588.431
=0.14333393

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=297.392/2237.148
=0.13293354

Heartland Payment Systems Inc's gross margin of this year was 0.14333393. Heartland Payment Systems Inc's gross margin of last year was 0.13293354. ==> 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)
=2588.431/1336.764
=1.93634104

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=2237.148/859.213
=2.60371759

Heartland Payment Systems Inc's asset turnover of this year was 1.93634104. Heartland Payment Systems Inc's asset turnover of last year was 2.60371759. ==> 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+1+0+1+1+0
=6

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

Heartland Payment Systems 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.

Heartland Payment Systems Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 111011111
Question 2 011101111
Question 3 100011100
Question 4 011101111
Question 5 110101100
Question 6 100010010
Question 7 001100111
Question 8 011001110
Question 9 000001000
F-score 455437764

Heartland Payment Systems Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 1111111111
Question 2 1111111111
Question 3 1100000000
Question 4 1111111111
Question 5 1100000001
Question 6 0011110000
Question 7 1111111111
Question 8 1111000011
Question 9 0000000110
F-score 7766554566
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