The Piotroski F Score is a combination of 9 accounting checks to come up with a final score for the quality of the business. The Piotroski Score is certainly a number you want to consider when searching for investment opportunities.
Here is another description of the Piotroski Score.
A discrete score between 0-9 which reflects nine criteria used to determine the strength of a firm’s financial position. The Piotroski score is used to determine the best value stocks, nine being the best. The score was named after Chicago Accounting Professor, Joseph Piotroski who devised the scale according to specific criteria found in the financial statements. For every criteria (below) that is met the company is given one point, if it is not met, then no points are awarded. The points are then added up to determine the best value stocks. (Investopedia)
The first four criteria of the Piotroski Score count towards the profitability.
1. Positive net income compared to last year (1 point)
2. Positive operating cash flow in the current year (1 point)
3. Higher return on assets (ROA) in the current period compared to the ROA in the previous year (1 point)
4. Cash flow from operations greater than Net Income (1 point)
Points 5-7 of the Piotroski Score, looks at the health of the balance sheet in teams of debt and the number of shares outstanding.
5. Lower ratio of long term debt to in the current period compared value in the previous year (1 point)
6. Higher current ratio this year compared to the previous year (1 point)
7. No new shares were issued in the last year (1 point)
The last two factors of the Piotroski Score looks the operating efficiency.
8. A higher gross margin compared to the previous year (1 point)
9. A higher asset turnover ratio compared to the previous year (1 point)
Obviously, the higher the score, the better. A company that achieves a score of 9 is fundamentally very strong. Any company that has a score 8 and above is considered excellent.
I’ve created a free spreadsheet for you to calculate the Piotroski score for any company. This is a very basic version that calculates the last 3 years of Piotroski scores, along with how each score was totaled.
The limitation is that financial companies such as banks, REIT’s and insurance companies cannot be calculated with the Piotroski Score spreadsheet as their GAAP financial statement format is different.
Screenshot of what the Piotroski spreadsheet looks like.
Simply enter the ticker into the yellow box and press calculate.
If you have never used this free Piotroski spreadsheet before, you will need to install a free Microsoft excel add-in called “SMF”, short for Stock Market Function, created by Randy from the Yahoo SMF group.
The premium version which includes 10 years of Piotroski Scores as well as many more features, do not require this add-in. It works without any additional add-in.
If you still have issues, place all questions in the comment sections below. That way other visitors will be able to see solutions to problems right away.
To download the spreadsheet, you must go to the main page of Old School Value or look at the bottom of any page and you can sign up with your email to receive the list of free spreadsheets.
The list includes not only the Piotroski spreadsheet, but also includes the SMF Excel add-in as well as other valuable material.
Feel free to check out the free version and then when ready, go to the stock valuation software page and review what you will get with the premium.
The premium version includes several valuation models as well as fundamental analysis data, historical data, charts and competitor comparison features. Just by entering one ticker, you can immediately get all that information on your favorite stock which will save you hours in your analysis.