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Prudential Financial Inc (NYSE:PRU)
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

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

PRU' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 5

3
7

During the past 13 years, the highest Piotroski F-Score of Prudential Financial Inc was 7. The lowest was 3. And the median was 4.


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 -460 + 1238 + 1090 + 512 = $2,380 Mil.
Cash Flow from Operations was 2962 + 1979 + 3576 + 5867 = $14,384 Mil.
Revenue was 9939 + 12854 + 13146 + 12380 = $48,319 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
(723126 + 731781 + 746735 + 765537 + 764147) / 5 = $746265.2 Mil.
Total Assets at the begining of this year (Sep13) was $723,126 Mil.
Long-Term Debt was $27,994 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was -181 + -720 + -514 + 1027 = $-388 Mil.

Revenue was 45944 + 10171 + 10041 + 11310 = $77,466 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
(671698 + 709235 + 724097 + 705615 + 723126) / 5 = $706754.2 Mil.
Total Assets at the begining of last year (Sep12) was $671,698 Mil.
Long-Term Debt was $23,642 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.

Prudential Financial Inc's current net income (TTM) was 2,380. ==> 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.

Prudential Financial Inc's current cash flow from operations (TTM) was 14,384. ==> 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)
=2380/723126
=0.00329127

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=-388/671698
=-0.00057764

Prudential Financial Inc's return on assets of this year was 0.00329127. Prudential Financial Inc's return on assets of last year was -0.00057764. ==> 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.

Prudential Financial Inc's current net income (TTM) was 2,380. Prudential Financial Inc's current cash flow from operations (TTM) was 14,384. ==> 14,384 > 2,380 ==> 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
=27994/746265.2
=0.03751213

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=23642/706754.2
=0.03345152

Prudential Financial Inc's gearing of this year was 0.03751213. Prudential Financial Inc's gearing of last year was 0.03345152. ==> 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
=

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.

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.

Prudential Financial Inc's number of shares in issue this year was 469.2. Prudential Financial Inc's number of shares in issue last year was 474. ==> 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
=0/48319
=0

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=0/77466
=0

Prudential Financial Inc's gross margin of this year was 0. Prudential Financial Inc'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)
=48319/723126
=0.06681961

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=77466/671698
=0.11532861

Prudential Financial Inc's asset turnover of this year was 0.06681961. Prudential Financial Inc's asset turnover of last year was 0.11532861. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

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

Prudential Financial 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.

Prudential Financial Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 111011110
Q2 111111111
Q3 100010100
Q4 111111111
Q5 100000111
Q6 000000000
Q7 111100011
Q8 000000000
Q9 000011110
F-score 644354664

Prudential Financial Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111000111
Q2 1111111111
Q3 1000000111
Q4 1111111111
Q5 1111111100
Q6 0000000000
Q7 1111101001
Q8 0000000000
Q9 1011110000
F-score 7566544545
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