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Alcoa Inc (NYSE:AA)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Alcoa Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

AA' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of Alcoa Inc was 8. The lowest was 3. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was -178 + 0 + 24 + -119 = $-273 Mil.
Cash Flow from Operations was -551 + 1364 + 214 + 514 = $1,541 Mil.
Revenue was 5454 + 0 + 5765 + 5849 = $17,068 Mil.
Gross Profit was 959 + 0 + 967 + 916 = $2,842 Mil.
Total Assets at the begining of this year (Mar13) was $40,106 Mil.
Total Assets was $35,605 Mil.
Long-Term Debt was $7,609 Mil.
Total Current Assets was $6,765 Mil.
Total Current Liabilities was $5,267 Mil.
Net Income was 149 + 242 + -143 + -2 = $246 Mil.

Revenue was 5833 + 5898 + 5833 + 5963 = $23,527 Mil.
Gross Profit was 986 + 1015 + 567 + 809 = $3,377 Mil.
Total Assets at the begining of last year (Mar12) was $40,703 Mil.
Total Assets was $40,106 Mil.
Long-Term Debt was $7,745 Mil.
Total Current Assets was $7,768 Mil.
Total Current Liabilities was $6,500 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Alcoa Inc's current net income was -273. ==> Negative ==> Score 0.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Alcoa Inc's current cash flow from operations was 1,541. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Mar13)
=-273/40106
=-0.00680696

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=246/40703
=0.00604378

Alcoa Inc's return on assets of this year was -0.00680696. Alcoa Inc's return on assets of last year was 0.00604378. ==> Last year is higher ==> Score 0.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Alcoa Inc's current net income was -273. Alcoa Inc's current cash flow from operations was 1,541. ==> 1,541 > -273 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=7609/35605
=0.21370594

Gearing (Last Year)=Long-Term Debt/Total Assets
=7745/40106
=0.19311325

Alcoa Inc's gearing of this year was 0.21370594. Alcoa Inc's gearing of last year was 0.19311325. ==> Last year is lower ==> Score 0.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=6765/5267
=1.28441238

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=7768/6500
=1.19507692

Alcoa Inc's current ratio of this year was 1.28441238. Alcoa Inc's current ratio of last year was 1.19507692. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Alcoa Inc's number of shares in issue this year was 1100.8. Alcoa Inc's number of shares in issue last year was 1169. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=2842/17068
=0.16651043

Gross Margin (Last Year)=Gross Profit/Revenue
=3377/23527
=0.14353721

Alcoa Inc's gross margin of this year was 0.16651043. Alcoa Inc's gross margin of last year was 0.14353721. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Mar13)
=17068/40106
=0.42557223

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=23527/40703
=0.57801636

Alcoa Inc's asset turnover of this year was 0.42557223. Alcoa Inc's asset turnover of last year was 0.57801636. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+1+0+1+0+1+1+1+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

Alcoa Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Alcoa Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111001110
Q2 1111111111
Q3 1011001100
Q4 1111111111
Q5 1100001110
Q6 0010011010
Q7 0111100011
Q8 1010001001
Q9 1110001100
F-score 7685338664

Alcoa Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 110111100
Q2 111111111
Q3 000001100
Q4 111111111
Q5 001111100
Q6 000100011
Q7 011100010
Q8 000001111
Q9 100001000
F-score 4446476450
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