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NewMarket Corp (NYSE:NEU)
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

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

NEU' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 8
Current: 7

3
8

During the past 13 years, the highest Piotroski F-Score of NewMarket Corp was 8. 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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 53.914 + 61.931 + 64.389 + 71.449 = $252 Mil.
Cash Flow from Operations was 79.679 + 74.267 + 113.714 + 71.509 = $339 Mil.
Revenue was 479.622 + 509.927 + 521.807 + 516.09 = $2,027 Mil.
Gross Profit was 153.305 + 175.55 + 178.4 + 177.401 = $685 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(1288.98 + 1286.249 + 1317.44 + 1358.282 + 1403.385) / 5 = $1330.8672 Mil.
Total Assets at the begining of this year (Sep15) was $1,289 Mil.
Long-Term Debt was $531 Mil.
Total Current Assets was $849 Mil.
Total Current Liabilities was $268 Mil.
Net Income was 52.055 + 63.947 + 58.733 + 62.009 = $237 Mil.

Revenue was 548.878 + 559.566 + 560.709 + 540.933 = $2,210 Mil.
Gross Profit was 157.528 + 181.272 + 169.708 + 174.771 = $683 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(1288.318 + 1231.925 + 1257.67 + 1291.117 + 1288.98) / 5 = $1271.602 Mil.
Total Assets at the begining of last year (Sep14) was $1,288 Mil.
Long-Term Debt was $508 Mil.
Total Current Assets was $804 Mil.
Total Current Liabilities was $258 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.

NewMarket Corp's current net income (TTM) was 252. ==> 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.

NewMarket Corp's current cash flow from operations (TTM) was 339. ==> 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 (Sep15)
=251.683/1288.98
=0.19525749

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=236.744/1288.318
=0.18376208

NewMarket Corp's return on assets of this year was 0.19525749. NewMarket Corp's return on assets of last year was 0.18376208. ==> 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.

NewMarket Corp's current net income (TTM) was 252. NewMarket Corp's current cash flow from operations (TTM) was 339. ==> 339 > 252 ==> 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=531.404/1330.8672
=0.39929153

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=507.571/1271.602
=0.3991587

NewMarket Corp's gearing of this year was 0.39929153. NewMarket Corp's gearing of last year was 0.3991587. ==> 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: Sep16)=Total Current Assets/Total Current Liabilities
=849.147/268.093
=3.16735983

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=804.041/257.757
=3.119376

NewMarket Corp's current ratio of this year was 3.16735983. NewMarket Corp's current ratio of last year was 3.119376. ==> This year's current ratio is higher. ==> Score 1.

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.

NewMarket Corp's number of shares in issue this year was 11.8. NewMarket Corp's number of shares in issue last year was 12.2. ==> 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
=684.656/2027.446
=0.33769383

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=683.279/2210.086
=0.30916399

NewMarket Corp's gross margin of this year was 0.33769383. NewMarket Corp's gross margin of last year was 0.30916399. ==> 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 (Sep15)
=2027.446/1288.98
=1.57290726

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=2210.086/1288.318
=1.71548174

NewMarket Corp's asset turnover of this year was 1.57290726. NewMarket Corp's asset turnover of last year was 1.71548174. ==> Last year's asset turnover is higher ==> Score 0.

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+1+1+1+0
=7

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

NewMarket 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 local exchange's currency.

NewMarket Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1101011101
Question 4 0101001111
Question 5 1101110100
Question 6 1010011100
Question 7 0111111111
Question 8 1101001101
Question 9 1110010000
F-score 7857477846

NewMarket Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 1000011111
Question 4 0011111111
Question 5 1000000000
Question 6 0000000101
Question 7 1111111111
Question 8 0001111111
Question 9 1001000000
F-score 6346566767
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