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Meritage Homes Corp (NYSE:MTH)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

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

Meritage Homes Corp has an F-score of 4 indicating the company's financial situation is typical for a stable company.

MTH' 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 Meritage Homes Corp 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 38.191 + 46.089 + 25.377 + 35.079 = $145 Mil.
Cash Flow from Operations was -20.005 + -46.75 + -131.667 + -42.983 = $-241 Mil.
Revenue was 497.275 + 541.67 + 412.445 + 510.352 = $1,962 Mil.
Gross Profit was 117.476 + 128.088 + 94.597 + 113.62 = $454 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(1767.477 + 1874.086 + 2003.361 + 2129.353 + 2192.678) / 5 = $1,993 Mil.
Total Assets was $2,193 Mil.
Long-Term Debt was $905 Mil.
Total Current Assets was $341 Mil.
Total Current Liabilities was $236 Mil.
Net Income was 6.784 + 95.128 + 12.041 + 28.143 = $142 Mil.

Revenue was 342.643 + 364.586 + 340.064 + 454.87 = $1,502 Mil.
Gross Profit was 62.424 + 68.973 + 67.591 + 99.217 = $298 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(1243.838 + 1481.202 + 1575.562 + 1770.985 + 1767.477) / 5 = $1,568 Mil.
Total Assets was $1,767 Mil.
Long-Term Debt was $798 Mil.
Total Current Assets was $384 Mil.
Total Current Liabilities was $193 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.

Meritage Homes Corp's current net income (ttm) was 145. ==> 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.

Meritage Homes Corp's current cash flow from operations (ttm) was -241. ==> 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)/Average Total Assets from Jun13 to Jun14
=144.736/1993.391
=0.07260793

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=142.096/1567.8128
=0.09063327

Meritage Homes Corp's return on assets of this year was 0.07260793. Meritage Homes Corp's return on assets of last year was 0.09063327. ==> 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.

Meritage Homes Corp's current net income (ttm) was 145. Meritage Homes Corp's current cash flow from operations (ttm) was -241. ==> -241 =< 145 ==> 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: Jun14)=Long-Term Debt/Total Assets
=904.771/2192.678
=0.41263286

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=798.215/1767.477
=0.45161267

Meritage Homes Corp's gearing of this year was 0.41263286. Meritage Homes Corp's gearing of last year was 0.45161267. ==> This year is lower or equal to last year. ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=341.269/235.756
=1.44755171

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=383.518/193.015
=1.98698547

Meritage Homes Corp's current ratio of this year was 1.44755171. Meritage Homes Corp's current ratio of last year was 1.98698547. ==> 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.

Meritage Homes Corp's number of shares in issue this year was 41.6. Meritage Homes Corp's number of shares in issue last year was 38.8. ==> 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
=453.781/1961.742
=0.23131533

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=298.205/1502.163
=0.19851707

Meritage Homes Corp's gross margin of this year was 0.23131533. Meritage Homes Corp's gross margin of last year was 0.19851707. ==> 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 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 Jun13 to Jun14
=1961.742/1993.391
=0.98412303

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=1502.163/1567.8128
=0.95812651

Meritage Homes Corp's asset turnover of this year was 0.98412303. Meritage Homes Corp's asset turnover of last year was 0.95812651. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Meritage Homes Corp 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, 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.

Meritage Homes Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1110001011
Q2 1100111000
Q3 1100111011
Q4 0001111000
Q5 0100000011
Q6 1011111000
Q7 0011000000
Q8 1100011011
Q9 1100000011
F-score 6633456055

Meritage Homes Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 0001111111
Q2 0000000000
Q3 0011111000
Q4 0000000000
Q5 0111111111
Q6 0000110000
Q7 0000000000
Q8 0001111111
Q9 0111111111
F-score 0235665444
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