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Toll Brothers Inc (NYSE:TOL)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Toll Brothers Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

TOL' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 4

2
8

During the past 13 years, the highest Piotroski F-Score of Toll Brothers Inc was 8. The lowest was 2. 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 (Apr14) TTM:Last Year (Apr13) TTM:
Net Income was 65.222 + 45.58 + 94.905 + 46.595 = $252 Mil.
Cash Flow from Operations was 184.203 + -250.388 + -112.428 + -11.127 = $-190 Mil.
Revenue was 860.374 + 643.681 + 1044.534 + 689.16 = $3,238 Mil.
Gross Profit was 172.376 + 129.649 + 222.273 + 144.071 = $668 Mil.
Total Assets at the begining of this year (Apr13) was $6,559 Mil.
Total Assets was $8,245 Mil.
Long-Term Debt was $3,458 Mil.
Total Current Assets was $7,004 Mil.
Total Current Liabilities was $1,084 Mil.
Net Income was 24.674 + 4.432 + 411.417 + 61.643 = $502 Mil.

Revenue was 516.004 + 424.601 + 632.826 + 554.319 = $2,128 Mil.
Gross Profit was 95.991 + 78.664 + 127.088 + 106.391 = $408 Mil.
Total Assets at the begining of last year (Apr12) was $5,365 Mil.
Total Assets was $6,559 Mil.
Long-Term Debt was $2,477 Mil.
Total Current Assets was $5,569 Mil.
Total Current Liabilities was $909 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.

Toll Brothers Inc's current net income 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.

Toll Brothers Inc's current cash flow from operations was -190. ==> Negative ==> Score 0.

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/Total Assets at the beginning of this year (Apr13)
=252.302/6558.605
=0.03846885

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Apr12)
=502.166/5365.085
=0.09359889

Toll Brothers Inc's return on assets of this year was 0.03846885. Toll Brothers Inc's return on assets of last year was 0.09359889. ==> 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.

Toll Brothers Inc's current net income was 252. Toll Brothers Inc's current cash flow from operations was -190. ==> -190 =< 252 ==> CFROA =< ROA ==> Score 0.

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)=Long-Term Debt/Total Assets
=3458.368/8245.066
=0.41944698

Gearing (Last Year)=Long-Term Debt/Total Assets
=2477.495/6558.605
=0.37774725

Toll Brothers Inc's gearing of this year was 0.41944698. Toll Brothers Inc's gearing of last year was 0.37774725. ==> 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)=Total Current Assets/Total Current Liabilities
=7004.029/1083.641
=6.46342193

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=5569.301/908.812
=6.1281112

Toll Brothers Inc's current ratio of this year was 6.46342193. Toll Brothers Inc's current ratio of last year was 6.1281112. ==> This year's current ratio is higher. ==> Score 1.

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.

Toll Brothers Inc's number of shares in issue this year was 186.4. Toll Brothers Inc's number of shares in issue last year was 178.1. ==> There is larger number of shares in issue this year. ==> Score 0.

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)=Gross Profit/Revenue
=668.369/3237.749
=0.20643015

Gross Margin (Last Year)=Gross Profit/Revenue
=408.134/2127.75
=0.19181483

Toll Brothers Inc's gross margin of this year was 0.20643015. Toll Brothers Inc's gross margin of last year was 0.19181483. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Apr13)
=3237.749/6558.605
=0.49366428

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Apr12)
=2127.75/5365.085
=0.39659204

Toll Brothers Inc's asset turnover of this year was 0.49366428. Toll Brothers Inc's asset turnover of last year was 0.39659204. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+0+0+0+0+1+0+1+1
=4

Good or high score = 8 or 9

Bad or low score = 0 or 1

Toll Brothers Inc has an F-score of 4 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.

Toll Brothers Inc Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1111000111
Q2 1101110100
Q3 1100001110
Q4 0001110100
Q5 1101001100
Q6 0110110110
Q7 0011100000
Q8 1100001111
Q9 1100000111
F-score 6735433853

Toll Brothers Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
Q1 1111111111
Q2 0000000000
Q3 0111111000
Q4 0000000000
Q5 1000001000
Q6 0111100011
Q7 1000000000
Q8 1111111111
Q9 1111111111
F-score 5555545344
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