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

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: 8
Current: 8

3
8

During the past 13 years, the highest Piotroski F-Score of Applied Materials 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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was 253 + 262 + 301 + 256 = $1,072 Mil.
Cash Flow from Operations was 372 + 437 + 584 + 407 = $1,800 Mil.
Revenue was 2190 + 2353 + 2265 + 2264 = $9,072 Mil.
Gross Profit was 891 + 1001 + 992 + 959 = $3,843 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(12043 + 12199 + 12555 + 12851 + 13174) / 5 = $12564.4 Mil.
Total Assets at the begining of this year (Oct13) was $12,043 Mil.
Long-Term Debt was $1,947 Mil.
Total Current Assets was $6,967 Mil.
Total Current Liabilities was $2,823 Mil.
Net Income was 34 + -129 + 168 + 183 = $256 Mil.

Revenue was 1573 + 1973 + 1975 + 1988 = $7,509 Mil.
Gross Profit was 582 + 808 + 806 + 795 = $2,991 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(12102 + 11714 + 11695 + 11751 + 12043) / 5 = $11861 Mil.
Total Assets at the begining of last year (Oct12) was $12,102 Mil.
Long-Term Debt was $1,946 Mil.
Total Current Assets was $5,642 Mil.
Total Current Liabilities was $2,443 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 (TTM) was 1,072. ==> 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 (TTM) was 1,800. ==> 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.

Applied Materials Inc's return on assets of this year was 0.08901437. Applied Materials Inc's return on assets of last year was 0.02115353. ==> 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 (TTM) was 1,072. Applied Materials Inc's current cash flow from operations (TTM) was 1,800. ==> 1,800 > 1,072 ==> 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: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=1947/12564.4
=0.15496164

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=1946/11861
=0.16406711

Applied Materials Inc's gearing of this year was 0.15496164. Applied Materials Inc's gearing of last year was 0.16406711. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=6967/2823
=2.46794191

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=5642/2443
=2.30945559

Applied Materials Inc's current ratio of this year was 2.46794191. Applied Materials Inc's current ratio of last year was 2.30945559. ==> 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 1234. Applied Materials Inc's number of shares in issue last year was 1222. ==> 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
=3843/9072
=0.42361111

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2991/7509
=0.39832201

Applied Materials Inc's gross margin of this year was 0.42361111. Applied Materials Inc's gross margin of last year was 0.39832201. ==> This year's gross margin is higher. ==> Score 1.

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 (Oct13)
=9072/12043
=0.75330067

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=7509/12102
=0.62047595

Applied Materials Inc's asset turnover of this year was 0.75330067. Applied Materials Inc's asset turnover of last year was 0.62047595. ==> 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 = 7, 8, 9
Bad or low score = 0, 1, 2, 3

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

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Q1 1111011111
Q2 1111111111
Q3 0110011011
Q4 1111111111
Q5 1101000101
Q6 0010101011
Q7 1111101110
Q8 0100011011
Q9 0110010001
F-score 5875467578

Applied Materials Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 1110011111
Q2 1111111111
Q3 0000011111
Q4 1111111111
Q5 1100000011
Q6 0000011111
Q7 1111110000
Q8 0000111111
Q9 0000001111
F-score 5543477788
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