The Piotroski Weekly – July 23, 2024
Here are some top Piotroski stocks for this week, selected based on the Piotroski scoring matrix. Read below for a full description.
| Company | Ticker | Piotroski Score | Market Cap |
| Teekay | $TK | 9 | $796M |
| Frontdoor | $FTDR | 9 | $2.9B |
| Manulife Financial | $MFC | 9 | $47B |
| Axalta Coating | $AXTA | 9 | $7.7B |
| Dorman Products | $DORM | 9 | $3B |
What is the Piotroski Score?
The Piotroski Score, a stock screening tool developed in 2000 by Joseph Piotroski, then an accounting professor at the University of Chicago (he’s at Stanford now).
Piotroski’s results were groundbreaking to value investors. Using nine simple yes/no criteria that sum up to what fans call the “Piotroski Score,” Piotroski found and documented a strategy that would have earned 23% per year from 1976-1996 (the date range he studied).
The Piotroski Score just tallies scores from the following nine criteria. A total score of 8 or 9 is considered especially good, and 2 or below is bad.
- Is return on assets (ROA) positive? (1 if yes, 0 if no)
- Is operating cash flow (OCF) positive? (1 if yes, 0 if no)
- Is current-year ROA > last year’s ROA? (1 if yes, 0 if no)
- Is OCF/total assets > ROA? (1 if yes, 0 if no)
- Did the long-term leverage ratio decrease relative to last year? (1 if yes, 0 if no)
- Did the current ratio increase relative to last year? (1 if yes, 0 if no)
- Were no new shares issued this year? (1 if yes, 0 if no)
- Did gross margin increase this year? (1 if yes, 0 if no)
- Did asset turnover increase this year? 1 if yes, 0 if no)
How should I use the Piotroski Score?
As we mentioned in our comprehensive Piotroski Score article, the Piotroski Score has adherents and detractors, as well as quasi-adherents who modify it in some way. A bit like value investing itself, the Piotroski Score may “work” in a very broad statistical sense over long time horizons, but may definitely not work (and may even be the inverse of what works) over multi-year time horizons when non-Piotroski factors are in vogue.
Most people likely use the Piotroski Score as an idea generation screen – a list from which to cherry pick stock ideas for further research. A subset of mechanical investing purists would say that’s wrong – that the whole point of such a screen is to remove human judgment. Ultimately, if and how you use the Piotroski Score is your call.
Just be mindful that the stocks above are simply mechanical results from the screen (we’ll use results from the Finbox.io screener), and not investment recommendations.
This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.
