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ABB Ltd (NYSE:ABB)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

ABB Ltd has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

ABB' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 8
Current: 6

2
8

During the past 13 years, the highest Piotroski F-Score of ABB Ltd was 8. The lowest was 2. 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 (Mar16) TTM:Last Year (Mar15) TTM:
Net Income was 588 + 577 + 204 + 500 = $1,869 Mil.
Cash Flow from Operations was 598 + 1173 + 1994 + 252 = $4,017 Mil.
Revenue was 9165 + 8519 + 9242 + 7903 = $34,829 Mil.
Gross Profit was 2720 + 2518 + 2395 + 2358 = $9,991 Mil.
Average Total Assets from the begining of this year (Mar15)
to the end of this year (Mar16) was
(43135 + 42693 + 41768 + 41356 + 41814) / 5 = $42153.2 Mil.
Total Assets at the begining of this year (Mar15) was $43,135 Mil.
Long-Term Debt was $6,126 Mil.
Total Current Assets was $23,083 Mil.
Total Current Liabilities was $15,770 Mil.
Net Income was 636 + 734 + 680 + 564 = $2,614 Mil.

Revenue was 10190 + 9823 + 10346 + 8555 = $38,914 Mil.
Gross Profit was 2885 + 2762 + 2841 + 2501 = $10,989 Mil.
Average Total Assets from the begining of last year (Mar14)
to the end of last year (Mar15) was
(48793 + 47075 + 45778 + 44852 + 43135) / 5 = $45926.6 Mil.
Total Assets at the begining of last year (Mar14) was $48,793 Mil.
Long-Term Debt was $7,203 Mil.
Total Current Assets was $23,999 Mil.
Total Current Liabilities was $14,661 Mil.

Profitability

Question 1. 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.

ABB Ltd's current net income (TTM) was 1,869. ==> Positive ==> Score 1.

Question 2. 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.

ABB Ltd's current cash flow from operations (TTM) was 4,017. ==> Positive ==> Score 1.

Question 3. 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.

ABB Ltd's return on assets of this year was 0.04332908. ABB Ltd's return on assets of last year was 0.05357326. ==> Last year is higher ==> Score 0.

Question 4. 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.

ABB Ltd's current net income (TTM) was 1,869. ABB Ltd's current cash flow from operations (TTM) was 4,017. ==> 4,017 > 1,869 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

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

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=6126/42153.2
=0.14532705

Gearing (Last Year: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=7203/45926.6
=0.15683721

ABB Ltd's gearing of this year was 0.14532705. ABB Ltd's gearing of last year was 0.15683721. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Mar16)=Total Current Assets/Total Current Liabilities
=23083/15770
=1.4637286

Current Ratio (Last Year: Mar15)=Total Current Assets/Total Current Liabilities
=23999/14661
=1.6369279

ABB Ltd's current ratio of this year was 1.4637286. ABB Ltd's current ratio of last year was 1.6369279. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

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

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

ABB Ltd's number of shares in issue this year was 2184. ABB Ltd's number of shares in issue last year was 2256. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. 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: TTM)=Gross Profit/Revenue
=9991/34829
=0.28685865

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=10989/38914
=0.28239194

ABB Ltd's gross margin of this year was 0.28685865. ABB Ltd's gross margin of last year was 0.28239194. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year 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 (TTM)/Total Assets at the Beginning of This Year (Mar15)
=34829/43135
=0.80744175

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=38914/48793
=0.79753243

ABB Ltd's asset turnover of this year was 0.80744175. ABB Ltd's asset turnover of last year was 0.79753243. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+1+1+1
=7

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

ABB Ltd has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


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.

ABB Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1100010000
Question 4 1011111111
Question 5 1110100111
Question 6 1101001110
Question 7 0010010011
Question 8 1110100001
Question 9 1100010000
F-score 8764564566

ABB Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Question 1 1111111111
Question 2 1111111111
Question 3 0000000100
Question 4 1111111111
Question 5 1001111111
Question 6 1111110000
Question 7 0011111111
Question 8 0000001111
Question 9 0010000001
F-score 5466666767
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