Switch to:
Arch Capital Group Ltd (NAS:ACGL)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Arch Capital Group Ltd has an F-score of 3 indicating the company's financial situation is typical for a stable company.

ACGL' s 10-Year Piotroski F-Score Range
Min: 2   Max: 7
Current: 3

2
7

During the past 13 years, the highest Piotroski F-Score of Arch Capital Group Ltd was 7. The lowest was 2. And the median was 5.


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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 114.825 + 161.49 + 182.5 + 208.016 = $667 Mil.
Cash Flow from Operations was 238.694 + 223.82 + 198.169 + 254.894 = $916 Mil.
Revenue was 861.148 + 923.078 + 946.231 + 1035.66 = $3,766 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(18917.683 + 18930.823 + 19566.094 + 21800.358 + 22573.515) / 5 = $20,358 Mil.
Total Assets was $22,574 Mil.
Long-Term Debt was $900 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was 189.656 + 19.217 + 256.476 + 176.94 = $642 Mil.

Revenue was 904.799 + 920.106 + 890.141 + 851.79 = $3,567 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(18496.723 + 18889.757 + 17816.762 + 18757.061 + 18917.683) / 5 = $18,576 Mil.
Total Assets was $18,918 Mil.
Long-Term Debt was $400 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Arch Capital Group Ltd's current net income (ttm) was 667. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Arch Capital Group Ltd's current cash flow from operations (ttm) was 916. ==> 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 (TTM)/Average Total Assets from Jun13 to Jun14
=666.831/20357.6946
=0.03275572

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=642.289/18575.5972
=0.03457703

Arch Capital Group Ltd's return on assets of this year was 0.03275572. Arch Capital Group Ltd's return on assets of last year was 0.03457703. ==> 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.

Arch Capital Group Ltd's current net income (ttm) was 667. Arch Capital Group Ltd's current cash flow from operations (ttm) was 916. ==> 916 > 667 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

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

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

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=900/22573.515
=0.03986973

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=400/18917.683
=0.02114424

Arch Capital Group Ltd's gearing of this year was 0.03986973. Arch Capital Group Ltd's gearing of last year was 0.02114424. ==> Last year is lower than this year ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=0/0
=

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=0/0
=

Arch Capital Group Ltd's current ratio of this year was . Arch Capital Group Ltd's current ratio of last year was . ==> Last year's current ratio is higher ==> Score 0.

Q7. 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.

Arch Capital Group Ltd's number of shares in issue this year was 136.9. Arch Capital Group Ltd's number of shares in issue last year was 135.8. ==> There is larger number of shares in issue this year. ==> Score 0.

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: TTM)=Gross Profit/Revenue
=0/3766.117
=0

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=0/3566.836
=0

Arch Capital Group Ltd's gross margin of this year was 0. Arch Capital Group Ltd's gross margin of last year was 0. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=3766.117/20357.6946
=0.18499722

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=3566.836/18575.5972
=0.1920173

Arch Capital Group Ltd's asset turnover of this year was 0.18499722. Arch Capital Group Ltd's asset turnover of last year was 0.1920173. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+0+0+0+0
=3

Good or high score = 8 or 9

Bad or low score = 0 or 1

Arch Capital Group Ltd has an F-score of 3 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, Altman Z-Score, Beneish M-Score


Historical Data

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

Arch Capital Group Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1011010011
Q4 1111110111
Q5 0111000110
Q6 0000000000
Q7 0001111111
Q8 0000000000
Q9 1010010011
F-score 5466463576

Arch Capital Group Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 0111100100
Q4 1111111111
Q5 1111111000
Q6 0000000000
Q7 1000111100
Q8 0000000000
Q9 0011111000
F-score 5566766533
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK