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

Good Sign:

Piotroski F-Score of 9 is 9, 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

Toll Brothers Inc has an F-score of 9. It is a good or high score, which usually indicates a very healthy situation.

TOL' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 9

2
9

During the past 13 years, the highest Piotroski F-Score of Toll Brothers Inc was 9. 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 (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was 65.222 + 97.707 + 131.524 + 81.325 = $376 Mil.
Cash Flow from Operations was 184.203 + 104.801 + 274.584 + -33.048 = $531 Mil.
Revenue was 860.374 + 1056.857 + 1350.69 + 853.452 = $4,121 Mil.
Gross Profit was 172.376 + 239.625 + 288.115 + 203.42 = $904 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(7760.255 + 8245.066 + 8331.916 + 8416.902 + 8421.619) / 5 = $8235.1516 Mil.
Total Assets at the begining of this year (Jan14) was $7,760 Mil.
Long-Term Debt was $3,368 Mil.
Total Current Assets was $7,156 Mil.
Total Current Liabilities was $1,091 Mil.
Net Income was 24.674 + 46.595 + 94.905 + 45.58 = $212 Mil.

Revenue was 516.004 + 689.16 + 1044.534 + 643.681 = $2,893 Mil.
Gross Profit was 95.991 + 144.071 + 222.273 + 129.649 = $592 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(6118.251 + 6558.605 + 6787.543 + 6827.459 + 7760.255) / 5 = $6810.4226 Mil.
Total Assets at the begining of last year (Jan13) was $6,118 Mil.
Long-Term Debt was $3,132 Mil.
Total Current Assets was $6,471 Mil.
Total Current Liabilities was $1,001 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.

Toll Brothers Inc's current net income (TTM) was 376. ==> 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.

Toll Brothers Inc's current cash flow from operations (TTM) was 531. ==> 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 (Jan14)
=375.778/7760.255
=0.04842341

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=211.754/6118.251
=0.03461022

Toll Brothers Inc's return on assets of this year was 0.04842341. Toll Brothers Inc's return on assets of last year was 0.03461022. ==> 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.

Toll Brothers Inc's current net income (TTM) was 376. Toll Brothers Inc's current cash flow from operations (TTM) was 531. ==> 531 > 376 ==> 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: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=3367.632/8235.1516
=0.40893382

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=3131.927/6810.4226
=0.45987264

Toll Brothers Inc's gearing of this year was 0.40893382. Toll Brothers Inc's gearing of last year was 0.45987264. ==> This year is lower or equal to last year. ==> Score 1.

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: Jan15)=Total Current Assets/Total Current Liabilities
=7155.865/1091.343
=6.5569349

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=6471.328/1000.955
=6.46515378

Toll Brothers Inc's current ratio of this year was 6.5569349. Toll Brothers Inc's current ratio of last year was 6.46515378. ==> This year's current ratio is higher. ==> Score 1.

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.

Toll Brothers Inc's number of shares in issue this year was 184.1. Toll Brothers Inc's number of shares in issue last year was 184.9. ==> 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
=903.536/4121.373
=0.21923179

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=591.984/2893.379
=0.20459954

Toll Brothers Inc's gross margin of this year was 0.21923179. Toll Brothers Inc's gross margin of last year was 0.20459954. ==> This year's gross margin is higher. ==> Score 1.

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 (Jan14)
=4121.373/7760.255
=0.53108732

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=2893.379/6118.251
=0.4729095

Toll Brothers Inc's asset turnover of this year was 0.53108732. Toll Brothers Inc's asset turnover of last year was 0.4729095. ==> 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+1+1+1+1+1
=9

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

Toll Brothers Inc has an F-score of 9. 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.

Toll Brothers Inc Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Question 1 1110001111
Question 2 1011101001
Question 3 1000011101
Question 4 0011101000
Question 5 1110010010
Question 6 1011101101
Question 7 0111000000
Question 8 1000011111
Question 9 1000001111
F-score 7364337546

Toll Brothers Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 1111111111
Question 2 0000000011
Question 3 1111000011
Question 4 0000000001
Question 5 0000100001
Question 6 1100011111
Question 7 0000000001
Question 8 1111111111
Question 9 1111111111
F-score 5544444469
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