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NRG Energy Inc (NYSE:NRG)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

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

NRG Energy Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NRG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of NRG Energy Inc 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was -97 + -56 + -312 + 124 = $-341 Mil.
Cash Flow from Operations was -21 + 391 + 447 + 901 = $1,718 Mil.
Revenue was 3621 + 3486 + 2795 + 3490 = $13,392 Mil.
Gross Profit was 804 + 753 + 853 + 1135 = $3,545 Mil.
Total Assets at the begining of this year (Jun13) was $34,492 Mil.
Total Assets was $37,629 Mil.
Long-Term Debt was $18,165 Mil.
Total Current Assets was $7,757 Mil.
Total Current Liabilities was $4,746 Mil.
Net Income was 124 + -332 + 252 + -1 = $43 Mil.

Revenue was 2929 + 2081 + 2063 + 2331 = $9,404 Mil.
Gross Profit was 878 + 328 + 583 + 591 = $2,380 Mil.
Total Assets at the begining of last year (Jun12) was $27,856 Mil.
Total Assets was $34,492 Mil.
Long-Term Debt was $15,889 Mil.
Total Current Assets was $6,943 Mil.
Total Current Liabilities was $4,411 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.

NRG Energy Inc's current net income was -341. ==> Negative ==> Score 0.

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.

NRG Energy Inc's current cash flow from operations was 1,718. ==> 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 (Jun13)
=-341/34492
=-0.00988635

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=43/27856
=0.00154365

NRG Energy Inc's return on assets of this year was -0.00988635. NRG Energy Inc's return on assets of last year was 0.00154365. ==> Last year is higher ==> Score 0.

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.

NRG Energy Inc's current net income was -341. NRG Energy Inc's current cash flow from operations was 1,718. ==> 1,718 > -341 ==> 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)=Long-Term Debt/Total Assets
=18165/37629
=0.48273938

Gearing (Last Year)=Long-Term Debt/Total Assets
=15889/34492
=0.46065754

NRG Energy Inc's gearing of this year was 0.48273938. NRG Energy Inc's gearing of last year was 0.46065754. ==> Last year is lower than this year ==> 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
=7757/4746
=1.63442899

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=6943/4411
=1.5740195

NRG Energy Inc's current ratio of this year was 1.63442899. NRG Energy Inc's current ratio of last year was 1.5740195. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

NRG Energy Inc's number of shares in issue this year was 337. NRG Energy Inc's number of shares in issue last year was 327. ==> 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)=Gross Profit/Revenue
=3545/13392
=0.26471027

Gross Margin (Last Year)=Gross Profit/Revenue
=2380/9404
=0.25308379

NRG Energy Inc's gross margin of this year was 0.26471027. NRG Energy Inc's gross margin of last year was 0.25308379. ==> 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 (Jun13)
=13392/34492
=0.38826395

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=9404/27856
=0.33759334

NRG Energy Inc's asset turnover of this year was 0.38826395. NRG Energy Inc's asset turnover of last year was 0.33759334. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+1+0+1+0+1+0+1+1
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

NRG Energy Inc has an F-score of 5 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.

NRG Energy Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111110
Q2 1111111111
Q3 0010100010
Q4 1101111111
Q5 0101101000
Q6 1001011011
Q7 0101111110
Q8 1000000011
Q9 1110111001
F-score 6646767475

NRG Energy Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1001111000
Q2 1111111111
Q3 1001011000
Q4 0111111111
Q5 0000000000
Q6 0001111111
Q7 1110000000
Q8 0001111111
Q9 1010001111
F-score 5346567555
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