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Prudential Financial Inc (NYSE:PRU)
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

Prudential Financial Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

PRU' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 6
Current: 6

3
6

During the past 13 years, the highest Piotroski F-Score of Prudential Financial Inc was 6. The lowest was 3. 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 (Dec15) TTM:Last Year (Dec14) TTM:
Net Income was 2036 + 1406 + 1465 + 735 = $5,642 Mil.
Cash Flow from Operations was 5528 + -2053 + 8355 + 2065 = $13,895 Mil.
Revenue was 15552 + 13712 + 13599 + 14256 = $57,119 Mil.
Gross Profit was 15552 + 13712 + 13599 + 14256 = $57,119 Mil.
Average Total Assets from the begining of this year (Dec14)
to the end of this year (Dec15) was
(766655 + 778612 + 762731 + 754527 + 757388) / 5 = $763982.6 Mil.
Total Assets at the begining of this year (Dec14) was $766,655 Mil.
Long-Term Debt was $28,324 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was 1238 + 1090 + 512 + -1459 = $1,381 Mil.

Revenue was 12854 + 13146 + 12380 + 15725 = $54,105 Mil.
Gross Profit was 12854 + 13146 + 12380 + 15725 = $54,105 Mil.
Average Total Assets from the begining of last year (Dec13)
to the end of last year (Dec14) was
(731781 + 746735 + 765537 + 764147 + 766655) / 5 = $754971 Mil.
Total Assets at the begining of last year (Dec13) was $731,781 Mil.
Long-Term Debt was $25,889 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 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.

Prudential Financial Inc's current net income (TTM) was 5,642. ==> 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.

Prudential Financial Inc's current cash flow from operations (TTM) was 13,895. ==> 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.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Dec14)
=5642/766655
=0.00735924

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=1381/731781
=0.00188718

Prudential Financial Inc's return on assets of this year was 0.00735924. Prudential Financial Inc's return on assets of last year was 0.00188718. ==> This year is higher. ==> Score 1.

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.

Prudential Financial Inc's current net income (TTM) was 5,642. Prudential Financial Inc's current cash flow from operations (TTM) was 13,895. ==> 13,895 > 5,642 ==> 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: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=28324/763982.6
=0.03707414

Gearing (Last Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=25889/754971
=0.03429138

Prudential Financial Inc's gearing of this year was 0.03707414. Prudential Financial Inc's gearing of last year was 0.03429138. ==> 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: Dec15)=Total Current Assets/Total Current Liabilities
=0/0
=

Current Ratio (Last Year: Dec14)=Total Current Assets/Total Current Liabilities
=0/0
=

Prudential Financial Inc's current ratio of this year was . Prudential Financial Inc's current ratio of last year was . ==> 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.

Prudential Financial Inc's number of shares in issue this year was 460.4. Prudential Financial Inc's number of shares in issue last year was 467.7. ==> 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
=57119/57119
=1

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=54105/54105
=1

Prudential Financial Inc's gross margin of this year was 1. Prudential Financial Inc's gross margin of last year was 1. ==> Last year's gross margin is higher ==> Score 0.

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 (Dec14)
=57119/766655
=0.07450418

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec13)
=54105/731781
=0.07393605

Prudential Financial Inc's asset turnover of this year was 0.07450418. Prudential Financial Inc's asset turnover of last year was 0.07393605. ==> 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+1+1+0+0+1+0+1
=6

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

Prudential Financial 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.

Prudential Financial Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1101111011
Question 2 1111111111
Question 3 0001010011
Question 4 1111111111
Question 5 0000011100
Question 6 0000000000
Question 7 1110001101
Question 8 0000000000
Question 9 1001111011
F-score 5435466456

Prudential Financial Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Question 1 0011111111
Question 2 1111111111
Question 3 0011111011
Question 4 1111111111
Question 5 1110001110
Question 6 0000000000
Question 7 0100101111
Question 8 0000000000
Question 9 1000011111
F-score 4454557676
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