Piotroski F-Score: what it is and how to use it on Brazilian (B3) stocks

Among stocks that look cheap, the F-Score tells apart the ones that are fundamentally improving from the ones merely falling. It's one of the world's most cited screens — now computed and auditable for 400+ companies on Brazil's stock exchange.

Where it comes from

In 2000, University of Chicago professor Joseph Piotroski published a study that became a classic: among stocks with a low price-to-book ("value" names), how do you separate the gems from the traps? He proposed a simple 0-to-9 score, summing nine objective tests of financial health. Portfolios built from the high scorers consistently beat the low scorers.

The key point most people miss: the F-Score measures year-over-year improvement, not absolute quality. An excellent company in a slow year can score 5; the number rises when the business improves relative to itself.

The 9 criteria (1 point each)

Profitability — 4 points

Positive ROA — did it earn a return on assets?

Positive operating cash flow

Rising ROA — up vs. the prior year?

Cash-backed earnings — operating cash flow above net income?

Leverage & liquidity — 3 points

Long-term debt fell (relative to assets)

Current ratio rose — more short-term slack

No dilution — no new share issuance

Efficiency — 2 points

Gross margin rose

Asset turnover rose — more revenue per unit of assets

How to read it. Above 7: fundamentals clearly improving. Below 3: deteriorating. 4 to 6: most of the market in a normal year. It's a signal, not a verdict — and never read apart from price and sector.

The B3 F-Score, with the math open

Foreign tools rarely cover the Brazilian market, and when they do, they hand you only the final number. At Dados B3 each of the 9 criteria comes separated and auditable — you see exactly which passed and why, tied to its source CVM account. The score isn't published for banks and insurers (different chart of accounts), and when a year's data is missing, the criterion doesn't score and that's declared — never guessed.

Real examples from fiscal year 2024 (not a recommendation — an illustration of the screen):

Ticker	Company	F-Score	Reading
MGLU3	Magazine Luiza	9 / 9	recovery across the board
TEND3	Construtora Tenda	8 / 9	operating turnaround
WEGE3	WEG	5 / 9	great company, a slower year
PETR4	Petrobras	4 / 9	weak commodity-price year

A top-quality company (WEG) scoring 5 isn't a contradiction: the F-Score measures the direction of the fundamentals that year, not how good the company is. Penny stocks and firms in bankruptcy protection typically show up at 0–1.

How to access it

Straight from the API or the AI connector (MCP) — ask Claude or ChatGPT "what's Magazine Luiza's Piotroski?" and the answer comes with all 9 criteria exposed. WEGE3 is free to try; the rest with a free key (200 requests/day, no card).

Create a free key

Honest limitations

It's backward-looking: it measures what already happened on the statements, not the future.
It measures improvement, not quality or price. A 9 on an expensive stock is not a "buy".
It doesn't apply to banks and insurers (their own chart of accounts).
Not investment advice. It's a screening tool — the judgment is yours.