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KKR Financial Holdings LLC (NYSE:KFN)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

KKR Financial Holdings LLC has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

KFN' s 10-Year Piotroski F-Score Range
Min: 2   Max: 5
Current: 2

2
5

During the past 10 years, the highest Piotroski F-Score of KKR Financial Holdings LLC was 5. The lowest was 2. And the median was 4.


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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 98.336 + 86.132 + 39.886 + 68.876 = $293.2 Mil.
Cash Flow from Operations was 39.678 + 29.713 + 33.941 + 48.233 = $151.6 Mil.
Revenue was 144.689 + 109.286 + 66.39 + 103.573 = $423.9 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0.0 Mil.
Average Total Assets from the begining of this year (Dec12)
to the end of this year (Dec13) was
(8358.879 + 8573.511 + 8681.439 + 8471.991 + 8717.198) / 5 = $8,560.6 Mil.
Total Assets was $8,717.2 Mil.
Long-Term Debt was $5,895.2 Mil.
Total Current Assets was $0.0 Mil.
Total Current Liabilities was $0.0 Mil.
Net Income was 88.048 + 71.205 + 111.964 + 77.013 = $348.2 Mil.

Revenue was 163.291 + 105.046 + 163.295 + 45.96 = $477.6 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0.0 Mil.
Average Total Assets from the begining of last year (Dec11)
to the end of last year (Dec12) was
(8647.228 + 8772.19 + 8359.637 + 8255.152 + 8358.879) / 5 = $8,478.6 Mil.
Total Assets was $8,358.9 Mil.
Long-Term Debt was $811.7 Mil.
Total Current Assets was $0.0 Mil.
Total Current Liabilities was $0.0 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.

KKR Financial Holdings LLC's current net income (ttm) was 293.2. ==> 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.

KKR Financial Holdings LLC's current cash flow from operations (ttm) was 151.6. ==> 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 Dec12 to Dec13
=293.23/8560.6036
=0.03425343

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Dec11 to Dec12
=348.23/8478.6172
=0.04107156

KKR Financial Holdings LLC's return on assets of this year was 0.03425343. KKR Financial Holdings LLC's return on assets of last year was 0.04107156. ==> Last year is higher ==> Score 0.

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.

KKR Financial Holdings LLC's current net income (ttm) was 293.2. KKR Financial Holdings LLC's current cash flow from operations (ttm) was 151.6. ==> 151.6 =< 293.2 ==> CFROA =< ROA ==> Score 0.

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: Dec13)=Long-Term Debt/Total Assets
=5895.176/8717.198
=0.6762696

Gearing (Last Year: Dec12)=Long-Term Debt/Total Assets
=811.723/8358.879
=0.09710907

KKR Financial Holdings LLC's gearing of this year was 0.6762696. KKR Financial Holdings LLC's gearing of last year was 0.09710907. ==> Last year is lower than this year ==> Score 0.

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: Dec13)=Total Current Assets/Total Current Liabilities
=0/0
=

Current Ratio (Last Year: Dec12)=Total Current Assets/Total Current Liabilities
=0/0
=

KKR Financial Holdings LLC's current ratio of this year was . KKR Financial Holdings LLC's current ratio of last year was . ==> 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.

KKR Financial Holdings LLC's number of shares in issue this year was 204.2. KKR Financial Holdings LLC's number of shares in issue last year was 202.4. ==> 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
=0/423.938
=0

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=0/477.592
=0

KKR Financial Holdings LLC's gross margin of this year was 0. KKR Financial Holdings LLC's gross margin of last year was 0. ==> Last year's gross margin is higher ==> Score 0.

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 Dec12 to Dec13
=423.938/8560.6036
=0.04952198

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Dec11 to Dec12
=477.592/8478.6172
=0.056329

KKR Financial Holdings LLC's asset turnover of this year was 0.04952198. KKR Financial Holdings LLC's asset turnover of last year was 0.056329. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+0+0+0+0+0+0
=2

Good or high score = 8 or 9

Bad or low score = 0 or 1

KKR Financial Holdings LLC has an F-score of 2. It is a bad or low score, which usually implies poor business operation.


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.

KKR Financial Holdings LLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 011111
Q2 111111
Q3 011010
Q4 110000
Q5 011010
Q6 000000
Q7 000000
Q8 000000
Q9 001010
F-score 255252

KKR Financial Holdings LLC Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 0001111000
Q4 0000000000
Q5 0000111000
Q6 0000000000
Q7 0010000000
Q8 0000000000
Q9 1101001000
F-score 3334445222
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