Joseph Piotroski
F-Score
Joseph Piotroski developed the F-Score as an academic researcher at the University of Chicago. His insight was that most high book-to-market (value) stocks are cheap for good reasons, but a simple 9-point scoring system based on profitability, leverage, and operating efficiency can identify the winners. The F-Score is best used as a filter on top of already-cheap stocks.
Methodology fidelity
Published rulesSources reviewed 2026-08-24The nine binary signals follow the original paper and belong inside a high book-to-market universe. Piotroski classifies 8-9 as high F-score and 0-1 as low F-score; the app’s intermediate NEUTRAL/FAIL bands are display conventions. The F-score is a financial-strength filter, not a valuation model, and book value per share is not an intrinsic value produced by the paper.
Valuation Method
No standalone valuation method
No investor formulaPiotroski starts with high book-to-market stocks and uses the F-score to separate financially strong firms from weak ones. The paper does not equate book value per share with intrinsic value.
Screening implementation (9 criteria)
| # | Criterion | Metric | Threshold | Data Source |
|---|---|---|---|---|
| 1 | ROA | Return on Assets | ROA > 0 (current year) | Net Income / Total Assets |
| 2 | Operating Cash Flow | CFO | CFO > 0 (current year) | Cash Flow Statement: CFO |
| 3 | ROA Change | Year-over-year ROA | ROA(current) > ROA(prior) | Year-over-year comparison |
| 4 | Accruals (Earnings Quality) | CFO/Total Assets vs. ROA | CFO/Total Assets > ROA | Quality of earnings check |
| 5 | Leverage Change | Long-term Debt / Avg Total Assets | Decreased year-over-year | Balance Sheet |
| 6 | Current Ratio Change | Current Ratio | Increased year-over-year | Balance Sheet |
| 7 | Share Dilution | Shares Outstanding | No new shares issued | Shares Outstanding, YoY |
| 8 | Gross Margin Change | Gross Margin | Improved year-over-year | Income Statement |
| 9 | Asset Turnover Change | Revenue / Total Assets | Improved year-over-year | Income Statement + Balance Sheet |
Verdict Logic
Score 0-9. Each signal that passes adds 1 point. The paper defines 8-9 as high F-score and 0-1 as low F-score, applied within high book-to-market stocks. The app labels 5-7 NEUTRAL and 0-4 FAIL for navigation; those bands are not Piotroski-published rules.
What Would Joseph Piotroski Buy Today?
Sources
Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers
primary2000Joseph D. Piotroski
The original academic paper published in the Journal of Accounting Research. Demonstrates that a simple 9-signal scoring system applied to high book-to-market stocks generates a 23% annual return spread between high and low F-Score portfolios.
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