Piotroski F-Score Explained: The Free Way to Find Strong Value Stocks

Here's something that should make you angry: most financial sites charge $240 to $449 per year for tools that calculate the Piotroski F-Score. Morningstar, GuruFocus, Finbox — they all lock this behind paywalls.

That's ridiculous. The F-Score uses publicly available financial data. The formula was published in a free academic paper. And the math is simple enough to do on a napkin.

So we're going to teach you the entire system — for free. By the end of this article, you'll know how to score any stock yourself, and you'll never need to pay for a premium screener again.

What Is the Piotroski F-Score?

In 2000, Stanford accounting professor Joseph Piotroski published a paper that rocked the value investing world. He found that by using 9 simple yes/no tests on a company's financial statements, you could separate the strong value stocks from the value traps.

His system scored each stock from 0 to 9:

8-9: Financially strong. Buy signal.
5-7: Average. Needs more analysis.
3-4: Weak. Proceed with caution.
0-2: Financially distressed. Avoid.

The results were stunning. Piotroski found that buying high-scoring stocks (8-9) and avoiding low-scoring ones (0-2) improved annual returns by 7.5% per year compared to buying value stocks blindly.

That's the difference between a $10,000 investment growing to $43,000 vs $76,000 over 10 years. Same starting amount. Same time period. Just better stock selection.

The 9 Criteria (Made Simple)

The F-Score tests 9 things across three categories. For each test, you score a 1 (pass) or 0 (fail). Let's break them down in plain English.

Category 1: Profitability (4 points)

1. Return on Assets (ROA) — Is the company profitable?

Net Income ÷ Total Assets
If positive → Score 1
If negative → Score 0
Translation: "Did the company actually make money with what it owns?"

2. Operating Cash Flow — Is real cash coming in?

Cash from operations on the cash flow statement
If positive → Score 1
If negative → Score 0
Translation: "Is the company generating actual cash, not just accounting profits?"

3. Change in ROA — Is profitability improving?

Compare this year's ROA to last year's ROA
If ROA increased → Score 1
If ROA decreased → Score 0
Translation: "Is the company getting better at making money?"

4. Quality of Earnings — Cash flow vs. reported income

Is Operating Cash Flow greater than Net Income?
If yes → Score 1
If no → Score 0
Translation: "Are the earnings real cash or just accounting tricks?" Companies that generate more cash than reported profit are the real deal.

Category 2: Leverage & Liquidity (3 points)

5. Change in Long-Term Debt — Is the company paying off debt?

Compare this year's long-term debt to last year's
If debt decreased → Score 1
If debt increased → Score 0
Translation: "Is the company getting healthier or borrowing more?"

6. Change in Current Ratio — Can it pay its short-term bills?

Current Assets ÷ Current Liabilities
If this ratio improved vs. last year → Score 1
If it got worse → Score 0
Translation: "If bills came due tomorrow, could the company pay them?"

7. Shares Outstanding — Is the company diluting you?

Compare shares outstanding this year vs. last year
If shares stayed the same or decreased → Score 1
If shares increased → Score 0
Translation: "Is the company printing more shares and watering down your ownership?"

Category 3: Operating Efficiency (2 points)

8. Change in Gross Margin — Are profit margins improving?

(Revenue - Cost of Goods) ÷ Revenue
If gross margin increased vs. last year → Score 1
If it decreased → Score 0
Translation: "Is the company keeping more of each dollar it earns?"

9. Change in Asset Turnover — Is the company using assets more efficiently?

Revenue ÷ Total Assets
If this ratio increased vs. last year → Score 1
If it decreased → Score 0
Translation: "Is the company squeezing more revenue out of what it owns?"

Scoring 3 Real Stocks (Step by Step)

Let's put this into practice with three real companies. All data is from their latest annual financial statements (FY 2025 vs. FY 2024), pulled from public sources.

Stock #1: Coca-Cola (KO) — Score: 7/9 ✅

Current Price: $78.10 | Dividend Yield: 2.71% | 64-Year Dividend Growth Streak

#	Test	Calculation	Result	Score
1	ROA Positive?	$13.1B ÷ $104.8B = 12.5%	Yes ✅	1
2	Operating Cash Flow Positive?	$7.4B	Yes ✅	1
3	ROA Improving?	12.5% (2025) vs. 10.6% (2024)	Improved ✅	1
4	Cash Flow > Net Income?	$7.4B < $13.1B	No ❌	0
5	Long-Term Debt Decreasing?	$42.1B (2025) vs. $42.4B (2024)	Decreased ✅	1
6	Current Ratio Improving?	1.46 (2025) vs. 1.03 (2024)	Improved ✅	1
7	No New Shares Issued?	4,303M (2025) vs. 4,309M (2024)	Decreased ✅	1
8	Gross Margin Improving?	61.63% (2025) vs. 61.06% (2024)	Improved ✅	1
9	Asset Turnover Improving?	0.457 (2025) vs. 0.468 (2024)	Declined ❌	0

F-Score: 7/9 — Strong. KO lost points on quality of earnings (they had large non-cash gains inflating net income above cash flow) and slightly declining asset turnover. But 7 out of 9 is solid — this is a financially healthy company.

Key takeaway: Coca-Cola is doing almost everything right. Profitability is improving, debt is going down, margins are expanding, and they're buying back shares instead of diluting. The two misses are minor.

Stock #2: Pfizer (PFE) — Score: 5/9 ⚠️

Current Price: $26.62 | Dividend Yield: 6.46% | 15-Year Dividend Growth Streak

#	Test	Calculation	Result	Score
1	ROA Positive?	$7.77B ÷ $208.2B = 3.7%	Yes ✅	1
2	Operating Cash Flow Positive?	$11.7B	Yes ✅	1
3	ROA Improving?	3.7% (2025) vs. 3.8% (2024)	Declined ❌	0
4	Cash Flow > Net Income?	$11.7B > $7.77B	Yes ✅	1
5	Long-Term Debt Decreasing?	$61.6B (2025) vs. $57.4B (2024)	Increased ❌	0
6	Current Ratio Improving?	1.16 (2025) vs. 1.17 (2024)	Declined ❌	0
7	No New Shares Issued?	5,683M (2025) vs. 5,664M (2024)	Increased ❌	0
8	Gross Margin Improving?	74.33% (2025) vs. 71.94% (2024)	Improved ✅	1
9	Asset Turnover Improving?	0.301 (2025) vs. 0.298 (2024)	Improved ✅	1

F-Score: 5/9 — Average. Pfizer passes the profitability tests but stumbles on leverage and liquidity. Long-term debt increased by $4.2 billion (from acquisitions), shares were slightly diluted, and the current ratio barely moved.

Key takeaway: That 6.46% dividend yield looks juicy, but the F-Score tells us Pfizer's financial position is middling. The company is profitable and generating strong cash flow, but it's taking on more debt and slightly diluting shareholders. This isn't a "avoid at all costs" score, but it means you should dig deeper before buying.

Stock #3: Ford (F) — Score: 3/9 ❌

Current Price: $12.81 | Dividend Yield: 4.68%

#	Test	Calculation	Result	Score
1	ROA Positive?	-$8.18B ÷ $289.2B = -2.8%	No ❌	0
2	Operating Cash Flow Positive?	$21.3B	Yes ✅	1
3	ROA Improving?	-2.8% (2025) vs. 2.1% (2024)	Declined ❌	0
4	Cash Flow > Net Income?	$21.3B > -$8.18B	Yes ✅	1
5	Long-Term Debt Decreasing?	$106.0B (2025) vs. $103.6B (2024)	Increased ❌	0
6	Current Ratio Improving?	1.075 (2025) vs. 1.165 (2024)	Declined ❌	0
7	No New Shares Issued?	3,976M (2025) vs. 3,978M (2024)	Decreased ✅	1
8	Gross Margin Improving?	6.84% (2025) vs. 14.36% (2024)	Declined ❌	0
9	Asset Turnover Improving?	0.648 (2025) vs. 0.649 (2024)	Declined ❌	0

F-Score: 3/9 — Weak. Ford is a cautionary tale. Despite generating $21.3 billion in operating cash flow, it reported an $8.2 billion net loss, its gross margins collapsed from 14.4% to 6.8%, and long-term debt increased.

Key takeaway: The F-Score is doing exactly what Piotroski designed it to do — warning you about a value trap. Ford looks cheap at $12.81, pays a 4.68% dividend, and has massive revenue. But under the hood, almost every financial metric is deteriorating. The EV transition is eating the company alive financially. A disciplined value investor using the F-Score would stay away — or at minimum, wait for these numbers to improve before buying.

F-Score vs. Graham Number: Side-by-Side Comparison

Here's where it gets really powerful. Let's compare what each tool tells us about the same stocks:

Stock	Price	Graham Number	Graham Verdict	F-Score	F-Score Verdict
KO	$78.10	~$22.63	Overvalued ⚠️	7/9	Financially Strong ✅
PFE	$26.62	$21.52	Overvalued ⚠️	5/9	Average ⚠️
F	$12.81	N/A (negative EPS)	Can't Calculate	3/9	Weak ❌

What this tells us:

Graham Number answers: "Is the price right?"
F-Score answers: "Is the company healthy?"

You want BOTH. A stock that's cheap (below Graham Number) but financially weak (low F-Score) is a value trap. A stock that's financially strong (high F-Score) but overpriced (above Graham Number) might be worth buying at a pullback.

The sweet spot? High F-Score + trading at or below the Graham Number. That's where Piotroski's research showed the best returns.

How to Use Both Tools Together (The Poor Man's Screening System)

Here's your free, two-step process that rivals $449/year screeners:

Step 1: Check the Graham Number

Use our free Graham Number Calculator to see if a stock is trading at or below fair value. If the stock price is below the Graham Number, it passes Step 1.

Step 2: Calculate the F-Score

Pull up the company's financials on a free site like StockAnalysis.com and run through the 9 tests. If the stock scores 7 or higher, it passes Step 2.

Step 3: Buy

Stocks that pass both tests are your best candidates. They're cheap AND financially strong — the exact combination that Piotroski proved beats the market.

🔜 Coming soon: We're building a free Piotroski F-Score Calculator that does all 9 tests automatically. Sign up for our newsletter to get notified when it launches.

The F-Score Cheat Sheet

Bookmark this. Use it every time you evaluate a stock.

PROFITABILITY (4 points)
□ 1. ROA positive?           (Net Income ÷ Total Assets > 0)
□ 2. OCF positive?           (Operating Cash Flow > 0)
□ 3. ROA improving?          (This year > Last year)
□ 4. OCF > Net Income?       (Cash earnings > Book earnings)

LEVERAGE & LIQUIDITY (3 points)
□ 5. LT Debt decreasing?     (This year < Last year)
□ 6. Current Ratio improving? (CA÷CL this year > last year)
□ 7. No dilution?            (Shares same or less than last year)

OPERATING EFFICIENCY (2 points)
□ 8. Gross Margin improving?  (This year > Last year)
□ 9. Asset Turnover improving?(Revenue÷Assets this year > last)

TOTAL: ___/9
8-9 = Strong  |  5-7 = Average  |  0-4 = Weak

Why We're Giving This Away Free

Other financial sites charge hundreds per year for F-Score data because they know it works. They're not wrong — the data is valuable.

But here's our philosophy at Poor Man's Stocks: the best investing tools shouldn't be locked behind paywalls. Benjamin Graham didn't patent value investing. Joseph Piotroski published his research for everyone. And the financial data these scores use is publicly available.

If you're investing with $500 or $5,000, the last thing you should do is spend $449 on a screener subscription. Learn the system, do the math yourself (or use our free tools), and keep that money invested where it belongs — in the market.

Start Screening Stocks Today

Now you know the Piotroski F-Score better than 95% of retail investors. Here's how to put it to work:

📊 Graham Number Calculator — Check if a stock is fairly priced (free)
📝 Use the F-Score Cheat Sheet above — Score any stock in 10 minutes
💰 How to Start Value Investing with $500 — Put your analysis into action
🔄 DRIP Investing Guide — Maximize returns with dividend reinvestment
🏦 Open a Moomoo Account or Webull Account — Start buying with $0 commissions

Related Tools

📊 Graham Number Calculator — Calculate fair value for any stock
💹 Intrinsic Value Calculator — Deep-dive valuation analysis
📈 P/E Ratio Calculator — Quick valuation check
💰 DRIP Calculator — Model dividend reinvestment growth

Keep Reading

💵 How to Start Value Investing with $500 — Put the F-Score to work with a small portfolio
💰 The Complete Guide to DRIP Investing — Supercharge returns with dividend reinvestment
📚 Value Investing for Beginners — Master the fundamentals of Graham-style investing
📉 What Is the Graham Number? — The companion valuation tool to the F-Score

Disclaimer: This article is for educational purposes only and does not constitute financial advice. The Piotroski F-Score is one tool among many and should not be used as the sole basis for investment decisions. Stock prices and financial data are as of March 2026. Always do your own research. Affiliate links may generate commissions at no cost to you.