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National Oilwell Varco Inc (NYSE:NOV)
Piotroski F-Score
6 (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 Oilwell Varco Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

NOV' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 6

2
8

During the past 13 years, the highest Piotroski F-Score of National Oilwell Varco Inc was 8. The lowest was 2. 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 (Mar15) TTM:Last Year (Mar14) TTM:
Net Income was 619 + 699 + 595 + 310 = $2,223 Mil.
Cash Flow from Operations was 871 + 519 + 736 + 114 = $2,240 Mil.
Revenue was 5255 + 5587 + 5709 + 4820 = $21,371 Mil.
Gross Profit was 1455 + 1528 + 1541 + 1177 = $5,701 Mil.
Average Total Assets from the begining of this year (Mar14)
to the end of this year (Mar15) was
(35480 + 33827 + 34270 + 33562 + 32424) / 5 = $33912.6 Mil.
Total Assets at the begining of this year (Mar14) was $35,480 Mil.
Long-Term Debt was $4,094 Mil.
Total Current Assets was $15,299 Mil.
Total Current Liabilities was $6,667 Mil.
Net Income was 531 + 636 + 658 + 589 = $2,414 Mil.

Revenue was 4680 + 4863 + 5302 + 4889 = $19,734 Mil.
Gross Profit was 1173 + 1360 + 1404 + 1290 = $5,227 Mil.
Average Total Assets from the begining of last year (Mar13)
to the end of last year (Mar14) was
(33556 + 33593 + 34673 + 34812 + 35480) / 5 = $34422.8 Mil.
Total Assets at the begining of last year (Mar13) was $33,556 Mil.
Long-Term Debt was $3,149 Mil.
Total Current Assets was $17,211 Mil.
Total Current Liabilities was $7,098 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.

National Oilwell Varco Inc's current net income (TTM) was 2,223. ==> 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.

National Oilwell Varco Inc's current cash flow from operations (TTM) was 2,240. ==> 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.

National Oilwell Varco Inc's return on assets of this year was 0.06265502. National Oilwell Varco Inc's return on assets of last year was 0.07193944. ==> Last year is higher ==> Score 0.

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.

National Oilwell Varco Inc's current net income (TTM) was 2,223. National Oilwell Varco Inc's current cash flow from operations (TTM) was 2,240. ==> 2,240 > 2,223 ==> 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: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=4094/33912.6
=0.12072209

Gearing (Last Year: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=3149/34422.8
=0.09148007

National Oilwell Varco Inc's gearing of this year was 0.12072209. National Oilwell Varco Inc's gearing of last year was 0.09148007. ==> 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: Mar15)=Total Current Assets/Total Current Liabilities
=15299/6667
=2.29473526

Current Ratio (Last Year: Mar14)=Total Current Assets/Total Current Liabilities
=17211/7098
=2.42476754

National Oilwell Varco Inc's current ratio of this year was 2.29473526. National Oilwell Varco Inc's current ratio of last year was 2.42476754. ==> Last year's current ratio is higher ==> Score 0.

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.

National Oilwell Varco Inc's number of shares in issue this year was 409. National Oilwell Varco Inc's number of shares in issue last year was 429. ==> 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
=5701/21371
=0.26676337

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5227/19734
=0.26487281

National Oilwell Varco Inc's gross margin of this year was 0.26676337. National Oilwell Varco Inc's gross margin of last year was 0.26487281. ==> 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 (Mar14)
=21371/35480
=0.60233935

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=19734/33556
=0.58809155

National Oilwell Varco Inc's asset turnover of this year was 0.60233935. National Oilwell Varco Inc's asset turnover of last year was 0.58809155. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+0+0+1+1+1
=6

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

National Oilwell Varco Inc 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 Oilwell Varco Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1011011100
Question 4 0101101011
Question 5 0111111011
Question 6 1010110100
Question 7 0000000000
Question 8 0111010001
Question 9 1011001101
F-score 5577566546

National Oilwell Varco Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 1000000000
Question 4 0001111111
Question 5 0000111110
Question 6 1111000000
Question 7 0000100001
Question 8 0000011111
Question 9 1110000001
F-score 5444555556
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