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Northern Trust Corp (NAS:NTRS)
Piotroski F-Score
5 (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

Northern Trust Corp has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NTRS' s 10-Year Piotroski F-Score Range
Min: 2   Max: 7
Current: 5

2
7

During the past 13 years, the highest Piotroski F-Score of Northern Trust Corp was 7. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 165.9 + 181.4 + 181.9 + 204.5 = $734 Mil.
Cash Flow from Operations was 0 + 538.5 + 1001.5 + -266.5 = $1,274 Mil.
Revenue was 878.7 + 1040.5 + 1081.7 + 1078.9 = $4,080 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(95969.5 + 102658.7 + 103832.6 + 105761.2 + 111153.7) / 5 = $103875.14 Mil.
Total Assets at the begining of this year (Sep13) was $95,970 Mil.
Long-Term Debt was $5,131 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was 187.3 + 164 + 191.1 + 206.5 = $749 Mil.

Revenue was 849.3 + 976.4 + 1020.5 + 1047.2 = $3,893 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(93632.5 + 97138.8 + 93156.8 + 97236 + 95969.5) / 5 = $95426.72 Mil.
Total Assets at the begining of last year (Sep12) was $93,633 Mil.
Long-Term Debt was $3,267 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 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.

Northern Trust Corp's current net income (TTM) was 734. ==> 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.

Northern Trust Corp's current cash flow from operations (TTM) was 1,274. ==> 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 (Sep13)
=733.7/95969.5
=0.00764514

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=748.9/93632.5
=0.00799829

Northern Trust Corp's return on assets of this year was 0.00764514. Northern Trust Corp's return on assets of last year was 0.00799829. ==> 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.

Northern Trust Corp's current net income (TTM) was 734. Northern Trust Corp's current cash flow from operations (TTM) was 1,274. ==> 1,274 > 734 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=5131.1/103875.14
=0.0493968

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=3267.1/95426.72
=0.03423674

Northern Trust Corp's gearing of this year was 0.0493968. Northern Trust Corp's gearing of last year was 0.03423674. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=0/0
=

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=0/0
=

Northern Trust Corp's current ratio of this year was . Northern Trust Corp's current ratio of last year was . ==> 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.

Northern Trust Corp's number of shares in issue this year was 237.7. Northern Trust Corp's number of shares in issue last year was 241.3. ==> There is smaller number of shares in issue this year, or the same. ==> 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: TTM)=Gross Profit/Revenue
=0/4079.8
=0

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=0/3893.4
=0

Northern Trust Corp's gross margin of this year was 0. Northern Trust Corp's gross margin of last year was 0. ==> 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 (Sep13)
=4079.8/95969.5
=0.04251142

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=3893.4/93632.5
=0.04158172

Northern Trust Corp's asset turnover of this year was 0.04251142. Northern Trust Corp's asset turnover of last year was 0.04158172. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

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

Northern Trust Corp 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.

Northern Trust Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Sep13
Q1 111111111
Q2 111111110
Q3 110000000
Q4 100111110
Q5 101001001
Q6 000000000
Q7 110010011
Q8 000000000
Q9 110110010
F-score 753454353

Northern Trust Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111011111
Q3 0001111100
Q4 1110011111
Q5 1111010010
Q6 0000000000
Q7 1111100111
Q8 0000000000
Q9 0000111111
F-score 5555465665
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