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NewMarket Corp (NYSE:NEU)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

The zones of discrimination were as such:

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

NewMarket Corp has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

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

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 own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 57.523 + 54.001 + 78.896 + 64.01 = $254 Mil.
Cash Flow from Operations was 4.381 + 69.535 + 85.493 + 95.778 = $255 Mil.
Revenue was 576.422 + 556.371 + 580.455 + 583.779 = $2,297 Mil.
Gross Profit was 161.93 + 151.638 + 163.823 + 169.428 = $647 Mil.
Total Assets at the begining of this year (Mar13) was $1,281 Mil.
Total Assets was $1,283 Mil.
Long-Term Debt was $355 Mil.
Total Current Assets was $854 Mil.
Total Current Liabilities was $231 Mil.
Net Income was 67.835 + 53.063 + 64.715 + 55.268 = $241 Mil.

Revenue was 559.75 + 513.322 + 551.187 + 587.548 = $2,212 Mil.
Gross Profit was 168.407 + 138.861 + 160.269 + 163.609 = $631 Mil.
Total Assets at the begining of last year (Mar12) was $1,253 Mil.
Total Assets was $1,281 Mil.
Long-Term Debt was $425 Mil.
Total Current Assets was $758 Mil.
Total Current Liabilities was $227 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.

NewMarket Corp's current net income was 254. ==> 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.

NewMarket Corp's current cash flow from operations was 255. ==> Positive ==> Score 1.

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/Total Assets at the beginning of this year (Mar13)
=254.43/1281.389
=0.19855797

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=240.881/1253.497
=0.19216719

NewMarket Corp's return on assets of this year was 0.19855797. NewMarket Corp's return on assets of last year was 0.19216719. ==> 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.

NewMarket Corp's current net income was 254. NewMarket Corp's current cash flow from operations was 255. ==> 255 > 254 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=355.482/1283.228
=0.2770217

Gearing (Last Year)=Long-Term Debt/Total Assets
=425.422/1281.389
=0.33200066

NewMarket Corp's gearing of this year was 0.2770217. NewMarket Corp's gearing of last year was 0.33200066. ==> This year is lower. ==> 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)=Total Current Assets/Total Current Liabilities
=853.795/231.033
=3.69555431

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=758.214/227.142
=3.33806165

NewMarket Corp's current ratio of this year was 3.69555431. NewMarket Corp's current ratio of last year was 3.33806165. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

NewMarket Corp's number of shares in issue this year was 13. NewMarket Corp's number of shares in issue last year was 13.4. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

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)=Gross Profit/Revenue
=646.819/2297.027
=0.28158964

Gross Margin (Last Year)=Gross Profit/Revenue
=631.146/2211.807
=0.28535311

NewMarket Corp's gross margin of this year was 0.28158964. NewMarket Corp's gross margin of last year was 0.28535311. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Mar13)
=2297.027/1281.389
=1.79260708

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=2211.807/1253.497
=1.76450921

NewMarket Corp's asset turnover of this year was 1.79260708. NewMarket Corp's asset turnover of last year was 1.76450921. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+1+1+0+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

NewMarket Corp has an F-score of 8. 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.

NewMarket Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 0111010111
Q4 1101010011
Q5 1111011101
Q6 1010100111
Q7 0001111111
Q8 0011010011
Q9 1111100100
F-score 6678574778

NewMarket Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 1100101111
Q4 0111101111
Q5 1111000011
Q6 1111111111
Q7 1111111111
Q8 0001111110
Q9 1100000001
F-score 7867757788
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