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FedNat Holding Co Piotroski F-Score

: 4 (As of Today)
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The zones of discrimination were as such:

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

FedNat Holding Co has an F-score of 4 indicating the company's financial situation is typical for a stable company.

NAS:FNHC' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Med: 5   Max: 9
Current: 4

1
9

During the past 13 years, the highest Piotroski F-Score of FedNat Holding Co was 9. The lowest was 1. And the median was 5.

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jun20) TTM:Last Year (Jun19) TTM:
Net Income was 4.659 + -6.893 + 2.133 + -21.479 = $-21.6 Mil.
Cash Flow from Operations was 0.789 + 8.93 + 21.373 + 35.767 = $66.9 Mil.
Revenue was 99.476 + 108.987 + 115.699 + 134.019 = $458.2 Mil.
Average Total Assets from the begining of this year (Jun19)
to the end of this year (Jun20) was
(996.283 + 1101.229 + 1179.016 + 1177.098 + 1214.786) / 5 = $1133.6824 Mil.
Total Assets at the begining of this year (Jun19) was $996.3 Mil.
Long-Term Debt & Capital Lease Obligation was $98.6 Mil.
Total Assets was $1,214.8 Mil.
Total Liabilities was $993.1 Mil.
Net Income was 7.95 + -9.305 + -3.865 + 7.11 = $1.9 Mil.

Revenue was 110.832 + 96.442 + 101.197 + 105.301 = $413.8 Mil.
Average Total Assets from the begining of last year (Jun18)
to the end of last year (Jun19) was
(951.843 + 890.611 + 925.371 + 1035.587 + 996.283) / 5 = $959.939 Mil.
Total Assets at the begining of last year (Jun18) was $951.8 Mil.
Long-Term Debt & Capital Lease Obligation was $98.4 Mil.
Total Assets was $996.3 Mil.
Total Liabilities was $765.5 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

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.

FedNat Holding Co's current Net Income (TTM) was -21.6. ==> Negative ==> Score 0.

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.

FedNat Holding Co's current Cash Flow from Operations (TTM) was 66.9. ==> 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/Total Assets (Jun19)
=-21.58/996.283
=-0.02166051

ROA (Last Year)=Net Income/Total Assets (Jun18)
=1.89/951.843
=0.00198562

FedNat Holding Co's return on assets of this year was -0.02166051. FedNat Holding Co's return on assets of last year was 0.00198562. ==> Last year is higher ==> Score 0.

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.

FedNat Holding Co's current Net Income (TTM) was -21.6. FedNat Holding Co's current Cash Flow from Operations (TTM) was 66.9. ==> 66.9 > -21.6 ==> 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: Jun20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun19 to Jun20
=98.603/1133.6824
=0.08697586

Gearing (Last Year: Jun19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun18 to Jun19
=98.442/959.939
=0.10255027

FedNat Holding Co's gearing of this year was 0.08697586. FedNat Holding Co's gearing of last year was 0.10255027. ==> 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

* Note that for banks and insurance companies, there's no Total Current Assets and Total Current Liabilities reported. Thus, we use Total Assets and Total Liabilities to calculate current ratio for banks and insurance companies.

Current Ratio (This Year: Jun20)=Total Assets/Total Liabilities
=1214.786/993.106
=1.22321887

Current Ratio (Last Year: Jun19)=Total Assets/Total Liabilities
=996.283/765.498
=1.30148348

FedNat Holding Co's current ratio of this year was 1.22321887. FedNat Holding Co's current ratio of last year was 1.30148348. ==> 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.

FedNat Holding Co's number of shares in issue this year was 13.714. FedNat Holding Co's number of shares in issue last year was 12.883. ==> 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.

* Note that for banks and insurance companies, there's no Gross Profit reported. Thus, we use net income instead of gross profit and calculate Net Margin for this score.

Net Margin (This Year: TTM)=Net Income/Revenue
=-21.58/458.181
=-0.04709929

Net Margin (Last Year: TTM)=Net Income/Revenue
=1.89/413.772
=0.00456773

FedNat Holding Co's net margin of this year was -0.04709929. FedNat Holding Co's net margin of last year was 0.00456773. ==> Last year's net 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/Total Assets at the Beginning of This Year (Jun19)
=458.181/996.283
=0.45989041

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jun18)
=413.772/951.843
=0.43470614

FedNat Holding Co's asset turnover of this year was 0.45989041. FedNat Holding Co's asset turnover of last year was 0.43470614. ==> 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
=0+1+0+1+1+0+0+0+1
=4

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

FedNat Holding Co has an F-score of 4 indicating the company's financial situation is typical for a stable company.

FedNat Holding Co  (NAS:FNHC) Piotroski F-Score 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.


FedNat Holding Co Piotroski F-Score Related Terms

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