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Principal Financial Group Piotroski F-Score

: 5 (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

Principal Financial Group has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NAS:PFG' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Med: 6   Max: 9
Current: 5

4
9

During the past 13 years, the highest Piotroski F-Score of Principal Financial Group was 9. The lowest was 4. And the median was 6.

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 277.1 + 300.9 + 288.9 + 398.3 = USD1,265 Mil.
Cash Flow from Operations was 1786.4 + 1028.4 + 1589.1 + 457 = USD4,861 Mil.
Revenue was 4458.4 + 4047.2 + 4551.3 + 3114.6 = USD16,172 Mil.
Average Total Assets from the begining of this year (Jun19)
to the end of this year (Jun20) was
(267918 + 270238.4 + 276087.8 + 246903.9 + 271309.4) / 5 = USD266491.5 Mil.
Total Assets at the begining of this year (Jun19) was USD267,918 Mil.
Long-Term Debt & Capital Lease Obligation was USD4,163 Mil.
Total Assets was USD271,309 Mil.
Total Liabilities was USD255,998 Mil.
Net Income was 456.3 + 236.5 + 429.9 + 386.3 = USD1,509 Mil.

Revenue was 4348.1 + 3770.6 + 3743.9 + 3972.6 = USD15,835 Mil.
Average Total Assets from the begining of last year (Jun18)
to the end of last year (Jun19) was
(252104 + 258758.3 + 243036.1 + 259419.9 + 267918) / 5 = USD256247.26 Mil.
Total Assets at the begining of last year (Jun18) was USD252,104 Mil.
Long-Term Debt & Capital Lease Obligation was USD3,762 Mil.
Total Assets was USD267,918 Mil.
Total Liabilities was USD253,816 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.

Principal Financial Group's current Net Income (TTM) was 1,265. ==> 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.

Principal Financial Group's current Cash Flow from Operations (TTM) was 4,861. ==> 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)
=1265.2/267918
=0.00472234

ROA (Last Year)=Net Income/Total Assets (Jun18)
=1509/252104
=0.00598562

Principal Financial Group's return on assets of this year was 0.00472234. Principal Financial Group's return on assets of last year was 0.00598562. ==> 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.

Principal Financial Group's current Net Income (TTM) was 1,265. Principal Financial Group's current Cash Flow from Operations (TTM) was 4,861. ==> 4,861 > 1,265 ==> 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
=4163.4/266491.5
=0.01562301

Gearing (Last Year: Jun19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun18 to Jun19
=3762.4/256247.26
=0.01468269

Principal Financial Group's gearing of this year was 0.01562301. Principal Financial Group's gearing of last year was 0.01468269. ==> 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

* 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
=271309.4/255998.4
=1.05980897

Current Ratio (Last Year: Jun19)=Total Assets/Total Liabilities
=267918/253816
=1.05555993

Principal Financial Group's current ratio of this year was 1.05980897. Principal Financial Group's current ratio of last year was 1.05555993. ==> 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.

Principal Financial Group's number of shares in issue this year was 275.6. Principal Financial Group's number of shares in issue last year was 281.2. ==> 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.

* 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
=1265.2/16171.5
=0.0782364

Net Margin (Last Year: TTM)=Net Income/Revenue
=1509/15835.2
=0.09529403

Principal Financial Group's net margin of this year was 0.0782364. Principal Financial Group's net margin of last year was 0.09529403. ==> 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)
=16171.5/267918
=0.06035989

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jun18)
=15835.2/252104
=0.06281217

Principal Financial Group's asset turnover of this year was 0.06035989. Principal Financial Group's asset turnover of last year was 0.06281217. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+0+1+1+0+0
=5

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

Principal Financial Group has an F-score of 5 indicating the company's financial situation is typical for a stable company.

Principal Financial Group  (NAS:PFG) 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.


Principal Financial Group Piotroski F-Score Related Terms

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