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

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

KLA-Tencor Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

KLAC' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of KLA-Tencor Corp 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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 131.638 + 142.019 + 104.897 + 152.207 = $531 Mil.
Cash Flow from Operations was 242.417 + 317.479 + 193.782 + 100.324 = $854 Mil.
Revenue was 738.459 + 756.332 + 642.644 + 710.245 = $2,848 Mil.
Gross Profit was 418.177 + 433.065 + 372.4 + 429.265 = $1,653 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(4987.366 + 4902.22 + 4826.012 + 4571.323 + 4572.516) / 5 = $4771.8874 Mil.
Total Assets at the begining of this year (Dec14) was $4,987 Mil.
Long-Term Debt was $3,151 Mil.
Total Current Assets was $3,685 Mil.
Total Current Liabilities was $858 Mil.
Net Income was 203.581 + 128.731 + 72.233 + 20.268 = $425 Mil.

Revenue was 831.599 + 734.343 + 642.901 + 676.357 = $2,885 Mil.
Gross Profit was 488.773 + 407.678 + 354.434 + 393.144 = $1,644 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(5440.734 + 5486.851 + 5535.846 + 5301.572 + 4987.366) / 5 = $5350.4738 Mil.
Total Assets at the begining of last year (Dec13) was $5,441 Mil.
Long-Term Debt was $3,209 Mil.
Total Current Assets was $4,046 Mil.
Total Current Liabilities was $942 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.

KLA-Tencor Corp's current net income (TTM) was 531. ==> 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.

KLA-Tencor Corp's current cash flow from operations (TTM) was 854. ==> 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 (Dec14)
=530.761/4987.366
=0.1064211

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=424.813/5440.734
=0.07808009

KLA-Tencor Corp's return on assets of this year was 0.1064211. KLA-Tencor Corp's return on assets of last year was 0.07808009. ==> This year is higher. ==> Score 1.

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.

KLA-Tencor Corp's current net income (TTM) was 531. KLA-Tencor Corp's current cash flow from operations (TTM) was 854. ==> 854 > 531 ==> 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=3151.25/4771.8874
=0.66037811

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=3208.571/5350.4738
=0.59967979

KLA-Tencor Corp's gearing of this year was 0.66037811. KLA-Tencor Corp's gearing of last year was 0.59967979. ==> Last year is lower than this year ==> Score 0.

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: Dec15)=Total Current Assets/Total Current Liabilities
=3684.705/858.33
=4.29287687

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=4046.248/942.34
=4.29383025

KLA-Tencor Corp's current ratio of this year was 4.29287687. KLA-Tencor Corp's current ratio of last year was 4.29383025. ==> 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.

KLA-Tencor Corp's number of shares in issue this year was 156. KLA-Tencor Corp's number of shares in issue last year was 165.3. ==> 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
=1652.907/2847.68
=0.58043987

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1644.029/2885.2
=0.56981457

KLA-Tencor Corp's gross margin of this year was 0.58043987. KLA-Tencor Corp's gross margin of last year was 0.56981457. ==> 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 (Dec14)
=2847.68/4987.366
=0.57097875

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=2885.2/5440.734
=0.5302961

KLA-Tencor Corp's asset turnover of this year was 0.57097875. KLA-Tencor Corp's asset turnover of last year was 0.5302961. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+0+0+1+1+1
=7

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

KLA-Tencor Corp has an F-score of 7. 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.

KLA-Tencor Corp Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
Question 1 1110111111
Question 2 1111111111
Question 3 0100110010
Question 4 0111111111
Question 5 1100011110
Question 6 1001011110
Question 7 0111011111
Question 8 0100110010
Question 9 0100110000
F-score 4844696684

KLA-Tencor Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0001100001
Question 4 1111111111
Question 5 1111100000
Question 6 0001100000
Question 7 1111111111
Question 8 0111100011
Question 9 0000100001
F-score 5668944457
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