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Kratos Defense & Security Solutions Inc (NAS:KTOS)
Piotroski F-Score
4 (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

Kratos Defense & Security Solutions Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

KTOS' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 4

1
8

During the past 13 years, the highest Piotroski F-Score of Kratos Defense & Security Solutions Inc was 8. The lowest was 1. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was -7.4 + -15 + -49.9 + -10.9 = $-83.2 Mil.
Cash Flow from Operations was 10.3 + 1.2 + -11.5 + -7.9 = $-7.9 Mil.
Revenue was 235.7 + 200.1 + 229.3 + 217.1 = $882.2 Mil.
Gross Profit was 61.5 + 52.6 + 56.4 + 53 = $223.5 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(1224.7 + 1216.6 + 1196.4 + 1172.1 + 1145.9) / 5 = $1191.14 Mil.
Total Assets at the begining of this year (Sep13) was $1,224.7 Mil.
Long-Term Debt was $662.9 Mil.
Total Current Assets was $376.7 Mil.
Total Current Liabilities was $227.2 Mil.
Net Income was -90 + -10.3 + -9.6 + -9.9 = $-119.8 Mil.

Revenue was 263.6 + 252.8 + 235.2 + 226.4 = $978.0 Mil.
Gross Profit was 68 + 65.7 + 60.4 + 52.3 = $246.4 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(1372.9 + 1283.9 + 1270.6 + 1222.3 + 1224.7) / 5 = $1274.88 Mil.
Total Assets at the begining of last year (Sep12) was $1,372.9 Mil.
Long-Term Debt was $644.6 Mil.
Total Current Assets was $429.3 Mil.
Total Current Liabilities was $256.2 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.

Kratos Defense & Security Solutions Inc's current net income (TTM) was -83.2. ==> Negative ==> Score 0.

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.

Kratos Defense & Security Solutions Inc's current cash flow from operations (TTM) was -7.9. ==> Negative ==> Score 0.

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)/Total Assets at the Beginning of This Year (Sep13)
=-83.2/1224.7
=-0.067935

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=-119.8/1372.9
=-0.08726054

Kratos Defense & Security Solutions Inc's return on assets of this year was -0.067935. Kratos Defense & Security Solutions Inc's return on assets of last year was -0.08726054. ==> 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.

Kratos Defense & Security Solutions Inc's current net income (TTM) was -83.2. Kratos Defense & Security Solutions Inc's current cash flow from operations (TTM) was -7.9. ==> -7.9 > -83.2 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=662.9/1191.14
=0.55652568

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=644.6/1274.88
=0.50561621

Kratos Defense & Security Solutions Inc's gearing of this year was 0.55652568. Kratos Defense & Security Solutions Inc's gearing of last year was 0.50561621. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=376.7/227.2
=1.65801056

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=429.3/256.2
=1.67564403

Kratos Defense & Security Solutions Inc's current ratio of this year was 1.65801056. Kratos Defense & Security Solutions Inc's current ratio of last year was 1.67564403. ==> 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.

Kratos Defense & Security Solutions Inc's number of shares in issue this year was 57.8. Kratos Defense & Security Solutions Inc's number of shares in issue last year was 57.1. ==> 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
=223.5/882.2
=0.25334391

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=246.4/978
=0.25194274

Kratos Defense & Security Solutions Inc's gross margin of this year was 0.25334391. Kratos Defense & Security Solutions Inc's gross margin of last year was 0.25194274. ==> This year's gross margin is higher. ==> Score 1.

Q9. 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 (Sep13)
=882.2/1224.7
=0.72033968

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=978/1372.9
=0.7123607

Kratos Defense & Security Solutions Inc's asset turnover of this year was 0.72033968. Kratos Defense & Security Solutions Inc's asset turnover of last year was 0.7123607. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+0+1+1+0+0+0+1+1
=4

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

Kratos Defense & Security Solutions Inc has an F-score of 4 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.

Kratos Defense & Security Solutions Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1100001000
Q2 1110011111
Q3 1001011001
Q4 0111111111
Q5 1010010011
Q6 0001110101
Q7 1010000000
Q8 1100101100
Q9 1001111000
F-score 7444466435

Kratos Defense & Security Solutions Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 0000000000
Q2 1111111110
Q3 0100001111
Q4 1111111111
Q5 1111110000
Q6 0000011100
Q7 0000000000
Q8 1100000001
Q9 0001000001
F-score 4534344434
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