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Verisk Analytics Inc (NAS:VRSK)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, 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

Verisk Analytics Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

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

5
7

During the past 8 years, the highest Piotroski F-Score of Verisk Analytics Inc was 7. 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 115.558 + 88.099 + 99.015 + 97.37 = $400 Mil.
Cash Flow from Operations was 232.828 + 54.007 + 91.8 + 110.817 = $489 Mil.
Revenue was 409.643 + 423.554 + 448.665 + 464.864 = $1,747 Mil.
Gross Profit was 239.97 + 251.084 + 267.792 + 271.282 = $1,030 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(2504.451 + 2640.004 + 2675.277 + 2677.7 + 2345.33) / 5 = $2568.5524 Mil.
Total Assets at the begining of this year (Dec13) was $2,504 Mil.
Long-Term Debt was $1,101 Mil.
Total Current Assets was $384 Mil.
Total Current Liabilities was $771 Mil.
Net Income was 80.511 + 84.205 + 96.441 + 87.223 = $348 Mil.

Revenue was 376.697 + 390.356 + 411.927 + 416.723 = $1,596 Mil.
Gross Profit was 233.065 + 237.927 + 255.621 + 246.567 = $973 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(2360.336 + 2516.347 + 2439.351 + 2429.872 + 2504.451) / 5 = $2450.0714 Mil.
Total Assets at the begining of last year (Dec12) was $2,360 Mil.
Long-Term Debt was $1,271 Mil.
Total Current Assets was $475 Mil.
Total Current Liabilities was $431 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.

Verisk Analytics Inc's current net income (TTM) was 400. ==> 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.

Verisk Analytics Inc's current cash flow from operations (TTM) was 489. ==> 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)
=400.042/2504.451
=0.15973241

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=348.38/2360.336
=0.14759763

Verisk Analytics Inc's return on assets of this year was 0.15973241. Verisk Analytics Inc's return on assets of last year was 0.14759763. ==> 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.

Verisk Analytics Inc's current net income (TTM) was 400. Verisk Analytics Inc's current cash flow from operations (TTM) was 489. ==> 489 > 400 ==> 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
=1100.874/2568.5524
=0.42859706

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=1271.439/2450.0714
=0.51893957

Verisk Analytics Inc's gearing of this year was 0.42859706. Verisk Analytics Inc's gearing of last year was 0.51893957. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=384.483/771.27
=0.49850636

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=474.845/431.179
=1.10127117

Verisk Analytics Inc's current ratio of this year was 0.49850636. Verisk Analytics Inc's current ratio of last year was 1.10127117. ==> 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.

Verisk Analytics Inc's number of shares in issue this year was 167.1. Verisk Analytics Inc's number of shares in issue last year was 171.7. ==> 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
=1030.128/1746.726
=0.58974791

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=973.18/1595.703
=0.6098754

Verisk Analytics Inc's gross margin of this year was 0.58974791. Verisk Analytics Inc's gross margin of last year was 0.6098754. ==> 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)
=1746.726/2504.451
=0.69744866

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=1595.703/2360.336
=0.67604909

Verisk Analytics Inc's asset turnover of this year was 0.69744866. Verisk Analytics Inc's asset turnover of last year was 0.67604909. ==> 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+0+1+0+1
=7

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

Verisk Analytics Inc has an F-score of 7. 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.

Verisk Analytics Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111
Question 2 1111
Question 3 0001
Question 4 1111
Question 5 0111
Question 6 1010
Question 7 1101
Question 8 1100
Question 9 0001
F-score 6657

Verisk Analytics Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 0000000011
Question 4 1111111111
Question 5 0111111111
Question 6 1011111110
Question 7 0000011111
Question 8 1111100000
Question 9 0000000011
F-score 5566666687
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