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Pentair PLC (NYSE:PNR)
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 = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Pentair PLC has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

PNR' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 7

3
8

During the past 13 years, the highest Piotroski F-Score of Pentair PLC 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 158.2 + 118.6 + 161.5 + -186 = $252 Mil.
Cash Flow from Operations was 285.5 + 0.6 + 414.4 + 268.4 = $969 Mil.
Revenue was 1916.7 + 1725.2 + 1910.8 + 1758.4 = $7,311 Mil.
Gross Profit was 644.1 + 578.3 + 658.9 + 624.7 = $2,506 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(11804.2 + 11743.3 + 11766.5 + 11616.8 + 10926.9) / 5 = $11571.54 Mil.
Total Assets at the begining of this year (Sep13) was $11,804 Mil.
Long-Term Debt was $2,961 Mil.
Total Current Assets was $3,052 Mil.
Total Current Liabilities was $1,669 Mil.
Net Income was -270.248 + 52 + 154.1 + 172.8 = $109 Mil.

Revenue was 1750.932 + 1774 + 1963.7 + 1824.8 = $7,313 Mil.
Gross Profit was 398.668 + 524 + 667.4 + 637.6 = $2,228 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(11972.335 + 11795.311 + 11721 + 11666.6 + 11804.2) / 5 = $11791.8892 Mil.
Total Assets at the begining of last year (Sep12) was $11,972 Mil.
Long-Term Debt was $2,571 Mil.
Total Current Assets was $3,211 Mil.
Total Current Liabilities was $1,678 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.

Pentair PLC's current net income (TTM) was 252. ==> 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.

Pentair PLC's current cash flow from operations (TTM) was 969. ==> 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)
=252.3/11804.2
=0.02137375

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=108.652/11972.335
=0.00907526

Pentair PLC's return on assets of this year was 0.02137375. Pentair PLC's return on assets of last year was 0.00907526. ==> 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.

Pentair PLC's current net income (TTM) was 252. Pentair PLC's current cash flow from operations (TTM) was 969. ==> 969 > 252 ==> 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
=2960.7/11571.54
=0.2558605

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=2570.7/11791.8892
=0.21800578

Pentair PLC's gearing of this year was 0.2558605. Pentair PLC's gearing of last year was 0.21800578. ==> 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
=3052.4/1668.7
=1.82920837

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=3211.3/1678.4
=1.9133103

Pentair PLC's current ratio of this year was 1.82920837. Pentair PLC's current ratio of last year was 1.9133103. ==> 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.

Pentair PLC's number of shares in issue this year was 193.1. Pentair PLC's number of shares in issue last year was 202.8. ==> 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
=2506/7311.1
=0.34276648

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2227.668/7313.432
=0.30459954

Pentair PLC's gross margin of this year was 0.34276648. Pentair PLC's gross margin of last year was 0.30459954. ==> This year's gross margin is higher. ==> Score 1.

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)
=7311.1/11804.2
=0.61936429

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=7313.432/11972.335
=0.61086096

Pentair PLC's asset turnover of this year was 0.61936429. Pentair PLC's asset turnover of last year was 0.61086096. ==> 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+0+0+1+1+1
=7

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

Pentair PLC has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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.

Pentair PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111101
Q2 1111111111
Q3 1001001001
Q4 1111011111
Q5 1110111011
Q6 0111110010
Q7 0011110100
Q8 1111001101
Q9 1101001110
F-score 7778567656

Pentair PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1100011111
Q2 1111111111
Q3 0000011111
Q4 1111111111
Q5 1101011110
Q6 1011010000
Q7 0000001111
Q8 1100001111
Q9 0011100001
F-score 6545367777
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