Switch to:
Rackspace Hosting Inc (NYSE:RAX)
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

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

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

5
8

During the past 11 years, the highest Piotroski F-Score of Rackspace Hosting Inc was 8. The lowest was 5. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 25.446 + 22.451 + 25.74 + 36.916 = $111 Mil.
Cash Flow from Operations was 141.659 + 124.537 + 125.428 + 150.886 = $543 Mil.
Revenue was 421.047 + 441.112 + 459.776 + 472.422 = $1,794 Mil.
Gross Profit was 280.63 + 296.061 + 316.822 + 318.51 = $1,212 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(1491.797 + 1566.949 + 1647.975 + 1724.542 + 1624.284) / 5 = $1611.1094 Mil.
Total Assets at the begining of this year (Dec13) was $1,492 Mil.
Long-Term Debt was $119 Mil.
Total Current Assets was $422 Mil.
Total Current Liabilities was $277 Mil.
Net Income was 27.261 + 22.367 + 16.311 + 20.798 = $87 Mil.

Revenue was 362.2 + 375.847 + 388.636 + 408.103 = $1,535 Mil.
Gross Profit was 248.59 + 258.189 + 261.232 + 274.282 = $1,042 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(1295.551 + 1348.35 + 1377.928 + 1451.769 + 1491.797) / 5 = $1393.079 Mil.
Total Assets at the begining of last year (Dec12) was $1,296 Mil.
Long-Term Debt was $25 Mil.
Total Current Assets was $439 Mil.
Total Current Liabilities was $259 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.

Rackspace Hosting Inc's current net income (TTM) was 111. ==> 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.

Rackspace Hosting Inc's current cash flow from operations (TTM) was 543. ==> 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 (Dec13)
=110.553/1491.797
=0.07410727

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=86.737/1295.551
=0.06694989

Rackspace Hosting Inc's return on assets of this year was 0.07410727. Rackspace Hosting Inc's return on assets of last year was 0.06694989. ==> 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.

Rackspace Hosting Inc's current net income (TTM) was 111. Rackspace Hosting Inc's current cash flow from operations (TTM) was 543. ==> 543 > 111 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=118.937/1611.1094
=0.07382304

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=25.172/1393.079
=0.01806933

Rackspace Hosting Inc's gearing of this year was 0.07382304. Rackspace Hosting Inc's gearing of last year was 0.01806933. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=421.743/276.718
=1.52408951

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=438.968/258.508
=1.69808284

Rackspace Hosting Inc's current ratio of this year was 1.52408951. Rackspace Hosting Inc's current ratio of last year was 1.69808284. ==> 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.

Rackspace Hosting Inc's number of shares in issue this year was 145.1. Rackspace Hosting Inc's number of shares in issue last year was 143.9. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=1212.023/1794.357
=0.67546369

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1042.293/1534.786
=0.67911292

Rackspace Hosting Inc's gross margin of this year was 0.67546369. Rackspace Hosting Inc's gross margin of last year was 0.67911292. ==> 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 (Dec13)
=1794.357/1491.797
=1.2028158

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=1534.786/1295.551
=1.18465888

Rackspace Hosting Inc's asset turnover of this year was 1.2028158. Rackspace Hosting Inc's asset turnover of last year was 1.18465888. ==> 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+0+0+1
=5

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

Rackspace Hosting 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.

Rackspace Hosting Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111
Question 2 1111111
Question 3 0011101
Question 4 1111111
Question 5 0111110
Question 6 1001110
Question 7 0000000
Question 8 1101000
Question 9 0011001
F-score 5568655

Rackspace Hosting Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1100000001
Question 4 1111111111
Question 5 1111111000
Question 6 1111111110
Question 7 0000000000
Question 8 0001100000
Question 9 1000000011
F-score 7656655455
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK