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HP 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

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

NYSE:HPQ' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Med: 5   Max: 8
Current: 4

1
8

During the past 13 years, the highest Piotroski F-Score of HP was 8. The lowest was 1. And the median was 5.


HP Piotroski F-Score Historical Data

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

* Premium members only.

HP Annual Data
Oct11 Oct12 Oct13 Oct14 Oct15 Oct16 Oct17 Oct18 Oct19 Oct20
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.00 7.00 5.00 5.00 4.00

HP Quarterly Data
Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Oct17 Jan18 Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.00 6.00 5.00 7.00 4.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


HP Piotroski F-Score Distribution

* The bar in red indicates where HP's Piotroski F-Score falls into.


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 (Oct20) TTM:Last Year (Oct19) TTM:
Net Income was 678 + 764 + 734 + 668 = $2,844 Mil.
Cash Flow from Operations was 1285 + -510 + 1667 + 1874 = $4,316 Mil.
Revenue was 14618 + 12469 + 14294 + 15258 = $56,639 Mil.
Gross Profit was 2872 + 2493 + 2393 + 2679 = $10,437 Mil.
Average Total Assets from the begining of this year (Oct19)
to the end of this year (Oct20) was
(33467 + 31656 + 33773 + 34244 + 34681) / 5 = $33564.2 Mil.
Total Assets at the begining of this year (Oct19) was $33,467 Mil.
Long-Term Debt & Capital Lease Obligation was $5,543 Mil.
Total Current Assets was $20,648 Mil.
Total Current Liabilities was $26,220 Mil.
Net Income was 803 + 782 + 1179 + 388 = $3,152 Mil.

Revenue was 14710 + 14036 + 14603 + 15407 = $58,756 Mil.
Gross Profit was 2612 + 2729 + 2905 + 2924 = $11,170 Mil.
Average Total Assets from the begining of last year (Oct18)
to the end of last year (Oct19) was
(34622 + 32490 + 31946 + 32405 + 33467) / 5 = $32986 Mil.
Total Assets at the begining of last year (Oct18) was $34,622 Mil.
Long-Term Debt & Capital Lease Obligation was $4,780 Mil.
Total Current Assets was $20,177 Mil.
Total Current Liabilities was $25,293 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.

HP's current Net Income (TTM) was 2,844. ==> 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.

HP's current Cash Flow from Operations (TTM) was 4,316. ==> 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 (Oct19)
=2844/33467
=0.08497923

ROA (Last Year)=Net Income/Total Assets (Oct18)
=3152/34622
=0.09104038

HP's return on assets of this year was 0.08497923. HP's return on assets of last year was 0.09104038. ==> 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.

HP's current Net Income (TTM) was 2,844. HP's current Cash Flow from Operations (TTM) was 4,316. ==> 4,316 > 2,844 ==> 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: Oct20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Oct19 to Oct20
=5543/33564.2
=0.1651462

Gearing (Last Year: Oct19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Oct18 to Oct19
=4780/32986
=0.14490996

HP's gearing of this year was 0.1651462. HP's gearing of last year was 0.14490996. ==> 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

Current Ratio (This Year: Oct20)=Total Current Assets/Total Current Liabilities
=20648/26220
=0.78749047

Current Ratio (Last Year: Oct19)=Total Current Assets/Total Current Liabilities
=20177/25293
=0.7977306

HP's current ratio of this year was 0.78749047. HP's current ratio of last year was 0.7977306. ==> 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.

HP's number of shares in issue this year was 1356. HP's number of shares in issue last year was 1485. ==> 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
=10437/56639
=0.18427232

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=11170/58756
=0.19010824

HP's gross margin of this year was 0.18427232. HP's gross margin of last year was 0.19010824. ==> 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/Total Assets at the Beginning of This Year (Oct19)
=56639/33467
=1.69238354

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Oct18)
=58756/34622
=1.69707123

HP's asset turnover of this year was 1.69238354. HP's asset turnover of last year was 1.69707123. ==> 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+0+1+0+0
=4

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

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

HP  (NYSE:HPQ) 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.


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