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KLA-Tencor Corp (NAS:KLAC)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

KLA-Tencor Corp has an F-score of 6 indicating the company's financial situation is typical for a stable company.

KLAC' 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 KLA-Tencor Corp was 9. The lowest was 2. 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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 139.246 + 111.197 + 134.77 + 166.382 = $552 Mil.
Cash Flow from Operations was 115.271 + 177.248 + 175.569 + 414.783 = $883 Mil.
Revenue was 705.129 + 658.337 + 720.032 + 729.029 = $2,813 Mil.
Gross Profit was 419.315 + 380.68 + 413.228 + 419.521 = $1,633 Mil.
Total Assets at the begining of this year (Dec12) was $5,069 Mil.
Total Assets was $5,441 Mil.
Long-Term Debt was $748 Mil.
Total Current Assets was $4,508 Mil.
Total Current Liabilities was $928 Mil.
Net Income was 106.63 + 135.367 + 247.877 + 205.346 = $695 Mil.

Revenue was 673.011 + 720.709 + 892.465 + 840.521 = $3,127 Mil.
Gross Profit was 369.096 + 403.484 + 530.802 + 485.372 = $1,789 Mil.
Total Assets at the begining of last year (Dec11) was $4,701 Mil.
Total Assets was $5,069 Mil.
Long-Term Debt was $747 Mil.
Total Current Assets was $4,136 Mil.
Total Current Liabilities was $782 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.

KLA-Tencor Corp's current net income was 552. ==> 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.

KLA-Tencor Corp's current cash flow from operations was 883. ==> 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 (Dec12)
=551.595/5068.763
=0.10882241

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=695.22/4700.988
=0.14788806

KLA-Tencor Corp's return on assets of this year was 0.10882241. KLA-Tencor Corp's return on assets of last year was 0.14788806. ==> 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.

KLA-Tencor Corp's current net income was 552. KLA-Tencor Corp's current cash flow from operations was 883. ==> 883 > 552 ==> 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
=747.647/5440.734
=0.13741657

Gearing (Last Year)=Long-Term Debt/Total Assets
=747.104/5068.763
=0.14739375

KLA-Tencor Corp's gearing of this year was 0.13741657. KLA-Tencor Corp's gearing of last year was 0.14739375. ==> 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
=4507.534/927.999
=4.8572617

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=4136.3/781.737
=5.2911657

KLA-Tencor Corp's current ratio of this year was 4.8572617. KLA-Tencor Corp's current ratio of last year was 5.2911657. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

KLA-Tencor Corp's number of shares in issue this year was 168.2. KLA-Tencor Corp's number of shares in issue last year was 169.1. ==> 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
=1632.744/2812.527
=0.58052563

Gross Margin (Last Year)=Gross Profit/Revenue
=1788.754/3126.706
=0.57208897

KLA-Tencor Corp's gross margin of this year was 0.58052563. KLA-Tencor Corp's gross margin of last year was 0.57208897. ==> This year's gross margin is higher. ==> Score 1.

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 (Dec12)
=2812.527/5068.763
=0.55487443

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=3126.706/4700.988
=0.66511678

KLA-Tencor Corp's asset turnover of this year was 0.55487443. KLA-Tencor Corp's asset turnover of last year was 0.66511678. ==> 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+1+1+0+1+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

KLA-Tencor Corp 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.

KLA-Tencor Corp Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Q1 1111101111
Q2 1111111111
Q3 1101001100
Q4 1101111111
Q5 0000001111
Q6 0110010111
Q7 1101110111
Q8 1101001100
Q9 1101001100
F-score 7837447966

KLA-Tencor Corp Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1100000000
Q4 1111111111
Q5 1111111111
Q6 1111111100
Q7 1111111111
Q8 1000000001
Q9 1100000000
F-score 9866666656
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