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National Grid PLC (NYSE:NGG)
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

National Grid PLC has an F-score of 6 indicating the company's financial situation is typical for a stable company.

NGG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 4

3
8

During the past 13 years, the highest Piotroski F-Score of National Grid PLC was 8. The lowest was 3. And the median was 5.


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 $4,113 Mil.
Cash Flow from Operations was $6,676 Mil.
Revenue was $24,600 Mil.
Gross Profit was $6,204 Mil.
Average Total Assets from the begining of this year (Mar13)
to the end of this year (Mar14) was (82511.3122172 + 87016.6112957) / 2 = $84763.9617564 Mil.
Total Assets at the begining of this year (Mar13) was $82,511 Mil.
Long-Term Debt was $37,274 Mil.
Total Current Assets was $12,440 Mil.
Total Current Liabilities was $12,178 Mil.
Net Income was $3,462 Mil.

Revenue was $21,658 Mil.
Gross Profit was $5,662 Mil.
Average Total Assets from the begining of last year (Mar12)
to the end of last year (Mar13) was (74897.1518987 + 82511.3122172) / 2 = $78704.232058 Mil.
Total Assets at the begining of last year (Mar12) was $74,897 Mil.
Long-Term Debt was $37,175 Mil.
Total Current Assets was $14,443 Mil.
Total Current Liabilities was $11,229 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.

National Grid PLC's current net income (TTM) was 4,113. ==> 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.

National Grid PLC's current cash flow from operations (TTM) was 6,676. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Mar13)
=4112.95681063/82511.3122172
=0.04984719

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar12)
=3461.53846154/74897.1518987
=0.04621722

National Grid PLC's return on assets of this year was 0.04984719. National Grid PLC's return on assets of last year was 0.04621722. ==> 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.

National Grid PLC's current net income (TTM) was 4,113. National Grid PLC's current cash flow from operations (TTM) was 6,676. ==> 6,676 > 4,113 ==> 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: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=37274.0863787/84763.9617564
=0.43973979

Gearing (Last Year: Mar13)=Long-Term Debt/Average Total Assets from Mar12 to Mar13
=37174.9622926/78704.232058
=0.47233753

National Grid PLC's gearing of this year was 0.43973979. National Grid PLC's gearing of last year was 0.47233753. ==> 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: Mar14)=Total Current Assets/Total Current Liabilities
=12440.1993355/12177.7408638
=1.02155231

Current Ratio (Last Year: Mar13)=Total Current Assets/Total Current Liabilities
=14443.438914/11229.2609351
=1.28623237

National Grid PLC's current ratio of this year was 1.02155231. National Grid PLC's current ratio of last year was 1.28623237. ==> 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.

National Grid PLC's number of shares in issue this year was 749.6. National Grid PLC's number of shares in issue last year was 748.4. ==> 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
=6204.31893688/24599.6677741
=0.25221149

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5662.14177979/21657.6168929
=0.26143882

National Grid PLC's gross margin of this year was 0.25221149. National Grid PLC's gross margin of last year was 0.26143882. ==> Last year's gross margin is higher ==> Score 0.

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 (Mar13)
=24599.6677741/82511.3122172
=0.29813691

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar12)
=21657.6168929/74897.1518987
=0.28916476

National Grid PLC's asset turnover of this year was 0.29813691. National Grid PLC's asset turnover of last year was 0.28916476. ==> 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+0+0+0+1
=6

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

National Grid PLC has an F-score of 6 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.

National Grid PLC Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Q1 1111111111
Q2 1111111111
Q3 0101011011
Q4 1010111111
Q5 0101101101
Q6 1010101010
Q7 0011100000
Q8 0101011010
Q9 0011011001
F-score 4567668466
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