Switch to:
Meritage Homes Corp (NYSE:MTH)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Meritage Homes Corp has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

MTH' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 3

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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 46.089 + 25.377 + 35.079 + 32.577 = $139 Mil.
Cash Flow from Operations was -46.75 + -131.667 + -42.983 + -61.503 = $-283 Mil.
Revenue was 541.67 + 412.445 + 510.352 + 562.308 = $2,027 Mil.
Gross Profit was 128.088 + 94.597 + 113.62 + 115.055 = $451 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(1874.086 + 2003.361 + 2129.353 + 2192.678 + 2272.812) / 5 = $2094.458 Mil.
Total Assets at the begining of this year (Sep13) was $1,874 Mil.
Long-Term Debt was $905 Mil.
Total Current Assets was $150 Mil.
Total Current Liabilities was $274 Mil.
Net Income was 95.128 + 12.041 + 28.143 + 38.191 = $174 Mil.

Revenue was 368.595 + 340.064 + 454.87 + 497.275 = $1,661 Mil.
Gross Profit was 72.485 + 67.591 + 99.217 + 117.476 = $357 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(1481.202 + 1575.562 + 1770.985 + 1767.477 + 1874.086) / 5 = $1693.8624 Mil.
Total Assets at the begining of last year (Sep12) was $1,481 Mil.
Long-Term Debt was $798 Mil.
Total Current Assets was $347 Mil.
Total Current Liabilities was $255 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.

Meritage Homes Corp's current net income (TTM) was 139. ==> 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.

Meritage Homes Corp's current cash flow from operations (TTM) was -283. ==> 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)
=139.122/1874.086
=0.07423459

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=173.503/1481.202
=0.11713662

Meritage Homes Corp's return on assets of this year was 0.07423459. Meritage Homes Corp's return on assets of last year was 0.11713662. ==> 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 139. Meritage Homes Corp's current cash flow from operations (TTM) was -283. ==> -283 <= 139 ==> CFROA <= ROA ==> Score 0.

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
=904.629/2094.458
=0.43191556

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=798.337/1693.8624
=0.4713116

Meritage Homes Corp's gearing of this year was 0.43191556. Meritage Homes Corp's gearing of last year was 0.4713116. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=150.14/273.652
=0.54865303

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=347.045/254.894
=1.36152675

Meritage Homes Corp's current ratio of this year was 0.54865303. Meritage Homes Corp's current ratio of last year was 1.36152675. ==> 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 41.7. Meritage Homes Corp's number of shares in issue last year was 38.9. ==> 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
=451.36/2026.775
=0.22269862

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=356.769/1660.804
=0.21481704

Meritage Homes Corp's gross margin of this year was 0.22269862. Meritage Homes Corp's gross margin of last year was 0.21481704. ==> 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)
=2026.775/1874.086
=1.08147385

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=1660.804/1481.202
=1.12125422

Meritage Homes Corp's asset turnover of this year was 1.08147385. Meritage Homes Corp's asset turnover of last year was 1.12125422. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+0+0+0+1+0+0+1+0
=3

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

Meritage Homes Corp has an F-score of 3. 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


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 1100011010
Q4 0001111000
Q5 1110000001
Q6 1011111000
Q7 0011000000
Q8 1100011011
Q9 1100001011
F-score 7643357044

Meritage Homes Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 0011111111
Q2 0000000000
Q3 0111110000
Q4 0000000000
Q5 1000011111
Q6 0001100000
Q7 0000000000
Q8 0111111111
Q9 1111111000
F-score 2345554333
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK