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Applied Materials Inc (NAS:AMAT)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

The zones of discrimination were as such:

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

Applied Materials Inc has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

AMAT' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 8

3
9

During the past 13 years, the highest Piotroski F-Score of Applied Materials Inc was 9. 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 (Jan14) TTM:Last Year (Jan13) TTM:
Net Income was 253 + 183 + 168 + -129 = $475 Mil.
Cash Flow from Operations was 372 + 19 + 364 + 224 = $979 Mil.
Revenue was 2190 + 1988 + 1975 + 1973 = $8,126 Mil.
Gross Profit was 891 + 795 + 806 + 808 = $3,300 Mil.
Total Assets at the begining of this year (Jan13) was $11,714 Mil.
Total Assets was $12,199 Mil.
Long-Term Debt was $1,946 Mil.
Total Current Assets was $6,014 Mil.
Total Current Liabilities was $2,477 Mil.
Net Income was 34 + -515 + 218 + 289 = $26 Mil.

Revenue was 1573 + 1646 + 2343 + 2541 = $8,103 Mil.
Gross Profit was 582 + 587 + 930 + 1011 = $3,110 Mil.
Total Assets at the begining of last year (Jan12) was $13,597 Mil.
Total Assets was $11,714 Mil.
Long-Term Debt was $1,946 Mil.
Total Current Assets was $4,765 Mil.
Total Current Liabilities was $1,965 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.

Applied Materials Inc's current net income was 475. ==> Positive ==> Score 1.

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.

Applied Materials Inc's current cash flow from operations was 979. ==> 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 (Jan13)
=475/11714
=0.04054977

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jan12)
=26/13597
=0.00191219

Applied Materials Inc's return on assets of this year was 0.04054977. Applied Materials Inc's return on assets of last year was 0.00191219. ==> This year is higher. ==> Score 1.

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.

Applied Materials Inc's current net income was 475. Applied Materials Inc's current cash flow from operations was 979. ==> 979 > 475 ==> 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)=Long-Term Debt/Total Assets
=1946/12199
=0.15952127

Gearing (Last Year)=Long-Term Debt/Total Assets
=1946/11714
=0.166126

Applied Materials Inc's gearing of this year was 0.15952127. Applied Materials Inc's gearing of last year was 0.166126. ==> This year is lower or equal to last year. ==> Score 1.

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
=6014/2477
=2.42793702

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=4765/1965
=2.42493639

Applied Materials Inc's current ratio of this year was 2.42793702. Applied Materials Inc's current ratio of last year was 2.42493639. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

Applied Materials Inc's number of shares in issue this year was 1225. Applied Materials Inc's number of shares in issue last year was 1212. ==> 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)=Gross Profit/Revenue
=3300/8126
=0.40610386

Gross Margin (Last Year)=Gross Profit/Revenue
=3110/8103
=0.38380847

Applied Materials Inc's gross margin of this year was 0.40610386. Applied Materials Inc's gross margin of last year was 0.38380847. ==> 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 (Jan13)
=8126/11714
=0.69369985

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jan12)
=8103/13597
=0.59594028

Applied Materials Inc's asset turnover of this year was 0.69369985. Applied Materials Inc's asset turnover of last year was 0.59594028. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+1+0+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Applied Materials Inc has an F-score of 8. 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.

Applied Materials Inc Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1111101111
Q2 1111111111
Q3 1011001101
Q4 1111111111
Q5 1011101000
Q6 0001010101
Q7 0111110111
Q8 1010001101
Q9 1011001000
F-score 7488547747

Applied Materials Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
Q1 1111100111
Q2 1111111111
Q3 1000000111
Q4 1111111111
Q5 0000000011
Q6 1000000111
Q7 1111111100
Q8 1000001111
Q9 0000000011
F-score 7444434788
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