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National Grid PLC (NYSE:NGG)
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 = 8 or 9
Bad or low score = 0 or 1

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: 2   Max: 7
Current: 7

2
7

During the past 13 years, the highest Piotroski F-Score of National Grid PLC was 7. The lowest was 2. 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 (Mar13) TTM:Last Year (Mar12) TTM:
Net Income was $3,515 Mil.
Cash Flow from Operations was $5,743 Mil.
Revenue was $21,989 Mil.
Gross Profit was $5,749 Mil.
Total Assets at the begining of this year (Mar12) was $75,736 Mil.
Total Assets was $83,775 Mil.
Long-Term Debt was $37,744 Mil.
Total Current Assets was $14,665 Mil.
Total Current Liabilities was $11,401 Mil.
Net Income was $3,258 Mil.

Revenue was $22,131 Mil.
Gross Profit was $5,662 Mil.
Total Assets at the begining of last year (Mar11) was $75,941 Mil.
Total Assets was $75,736 Mil.
Long-Term Debt was $32,853 Mil.
Total Current Assets was $8,619 Mil.
Total Current Liabilities was $9,606 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 was 3,515. ==> 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 was 5,743. ==> 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 (Mar12)
=3514.5482389/75736
=0.04640525

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar11)
=3257.6/75941.0801964
=0.04289641

National Grid PLC's return on assets of this year was 0.04640525. National Grid PLC's return on assets of last year was 0.04289641. ==> 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 was 3,515. National Grid PLC's current cash flow from operations was 5,743. ==> 5,743 > 3,515 ==> 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
=37744.2572741/83774.8851455
=0.45054383

Gearing (Last Year)=Long-Term Debt/Total Assets
=32852.8/75736
=0.4337805

National Grid PLC's gearing of this year was 0.45054383. National Grid PLC's gearing of last year was 0.4337805. ==> Last year is lower ==> Score 0.

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
=14664.6248086/11401.2251149
=1.28623237

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=8619.2/9606.4
=0.89723518

National Grid PLC's current ratio of this year was 1.28623237. National Grid PLC's current ratio of last year was 0.89723518. ==> 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.

National Grid PLC's number of shares in issue this year was 736.4. National Grid PLC's number of shares in issue last year was 735.6. ==> There is more 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)=Gross Profit/Revenue
=5748.85145482/21989.280245
=0.26143882

Gross Margin (Last Year)=Gross Profit/Revenue
=5662.4/22131.2
=0.25585599

National Grid PLC's gross margin of this year was 0.26143882. National Grid PLC's gross margin of last year was 0.25585599. ==> This year's gross margin is higher. ==> Score 1.

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 (Mar12)
=21989.280245/75736
=0.29034119

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar11)
=22131.2/75941.0801964
=0.29142593

National Grid PLC's asset turnover of this year was 0.29034119. National Grid PLC's asset turnover of last year was 0.29142593. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+1+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

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

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
Q1 1111111111
Q2 0111111111
Q3 1010101101
Q4 0101011111
Q5 0010101110
Q6 0101010101
Q7 0011110000
Q8 0010101001
Q9 1001101100
F-score 3466757746
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