Stock analysis model
Piotroski F-Score
The Piotroski F-Score is a nine-point system designed to assess the financial strength of a company. It combines profitability, leverage, liquidity and efficiency criteria into a single score.
When Piotroski F-Score is useful
- Screening value stocks for improving financial quality.
- Comparing fundamental momentum across companies with available financial statements.
- Adding a balance-sheet and earnings-quality check to a valuation analysis.
Limitations to consider
- The score does not estimate intrinsic value or a target price.
- One-time accounting effects can distort individual criteria.
- Sector-specific business models can make direct comparisons less meaningful.
How the model works
- 1Evaluate positive net income and return on assets.
- 2Check whether operating cash flow is positive and exceeds net income.
- 3Measure changes in long-term leverage and current liquidity.
- 4Check whether the company avoided issuing additional shares.
- 5Evaluate changes in gross margin and asset turnover.
- 6Award one point for each of the nine criteria that is satisfied.
How to interpret the result
Scores of eight or nine generally indicate strong and improving fundamentals, while low scores can signal weak profitability, deteriorating leverage or poor operating efficiency. The score is a screening tool and should not replace valuation or qualitative research.
Frequently asked questions
What is a good Piotroski F-Score?
A score of eight or nine is generally considered strong. Scores around four or five are mixed, while very low scores can indicate weak or deteriorating fundamentals.
Does the Piotroski F-Score predict stock returns?
It was designed to separate financially strong value companies from weak ones, but no score guarantees future returns. Market valuation and business quality still matter.
Can the F-Score be negative?
No. The score ranges from zero to nine because each of the nine binary criteria contributes either zero or one point.
Learn the method in context
Go beyond the score with worked explanations, assumptions and common mistakes in the Stock Insights Academy.
Read the related Academy guideApply Piotroski F-Score to a stock
Use Stock Insights to combine this model with additional valuation and financial health checks.
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