Switch to:
Arch Coal Inc (NYSE:ACI)
Piotroski F-Score
1 (As of Today)

Warning Sign:

Piotroski F-Score of 1 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Arch Coal Inc has an F-score of 1. It is a bad or low score, which usually implies poor business operation.

ACI' s 10-Year Piotroski F-Score Range
Min: 1   Max: 9
Current: 1

1
9

During the past 13 years, the highest Piotroski F-Score of Arch Coal Inc was 9. The lowest was 1. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was -371.214 + -124.139 + -96.86 + -97.218 = $-689 Mil.
Cash Flow from Operations was -130.85 + -40.275 + -38.071 + 80.336 = $-129 Mil.
Revenue was 719.386 + 735.971 + 713.776 + 742.18 = $2,911 Mil.
Gross Profit was 50.903 + 49.657 + 91.639 + 95.084 = $287 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(9531.455 + 8990.193 + 8823.184 + 8656.108 + 8618.782) / 5 = $8923.9444 Mil.
Total Assets at the begining of this year (Sep13) was $9,531 Mil.
Long-Term Debt was $5,126 Mil.
Total Current Assets was $1,626 Mil.
Total Current Liabilities was $547 Mil.
Net Income was -295.423 + -70.049 + -72.206 + -128.363 = $-566 Mil.

Revenue was 867.034 + 737.37 + 766.332 + 791.269 = $3,162 Mil.
Gross Profit was 126.241 + 87.627 + 110.134 + 102.557 = $427 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(9935.854 + 10006.777 + 9920.144 + 9730.729 + 9531.455) / 5 = $9824.9918 Mil.
Total Assets at the begining of last year (Sep12) was $9,936 Mil.
Long-Term Debt was $5,074 Mil.
Total Current Assets was $2,030 Mil.
Total Current Liabilities was $580 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.

Arch Coal Inc's current net income (TTM) was -689. ==> 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.

Arch Coal Inc's current cash flow from operations (TTM) was -129. ==> Negative ==> Score 0.

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)/Total Assets at the Beginning of This Year (Sep13)
=-689.431/9531.455
=-0.07233219

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=-566.041/9935.854
=-0.05696954

Arch Coal Inc's return on assets of this year was -0.07233219. Arch Coal Inc's return on assets of last year was -0.05696954. ==> 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 Coal Inc's current net income (TTM) was -689. Arch Coal Inc's current cash flow from operations (TTM) was -129. ==> -129 > -689 ==> 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 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=5126.186/8923.9444
=0.57443052

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=5074.384/9824.9918
=0.51647717

Arch Coal Inc's gearing of this year was 0.57443052. Arch Coal Inc's gearing of last year was 0.51647717. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=1625.717/546.521
=2.9746652

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=2029.639/579.777
=3.50072355

Arch Coal Inc's current ratio of this year was 2.9746652. Arch Coal Inc's current ratio of last year was 3.50072355. ==> 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 Coal Inc's number of shares in issue this year was 212.2. Arch Coal Inc's number of shares in issue last year was 212.1. ==> 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
=287.283/2911.313
=0.09867816

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=426.559/3162.005
=0.13490143

Arch Coal Inc's gross margin of this year was 0.09867816. Arch Coal Inc's gross margin of last year was 0.13490143. ==> 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 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 (Sep13)
=2911.313/9531.455
=0.30544266

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=3162.005/9935.854
=0.31824189

Arch Coal Inc's asset turnover of this year was 0.30544266. Arch Coal Inc's asset turnover of last year was 0.31824189. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

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

Arch Coal Inc has an F-score of 1. It is a bad or low score, which usually implies poor business operation.


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.

Arch Coal Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111100
Q2 1111111111
Q3 1010101001
Q4 1111111111
Q5 0101101010
Q6 1000111011
Q7 0001000000
Q8 1010101000
Q9 1010101100
F-score 7465848444

Arch Coal Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 0000000000
Q2 1111111000
Q3 0000001100
Q4 1111111111
Q5 1110000000
Q6 1111111110
Q7 0010000000
Q8 0000000000
Q9 0000000000
F-score 4453334321
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