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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: 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 (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was 262 + 301 + 256 + 348 = $1,167 Mil.
Cash Flow from Operations was 437 + 584 + 407 + 60 = $1,488 Mil.
Revenue was 2353 + 2265 + 2264 + 2359 = $9,241 Mil.
Gross Profit was 1001 + 992 + 959 + 959 = $3,911 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(12199 + 12555 + 12851 + 13174 + 13073) / 5 = $12770.4 Mil.
Total Assets at the begining of this year (Jan14) was $12,199 Mil.
Long-Term Debt was $1,947 Mil.
Total Current Assets was $6,933 Mil.
Total Current Liabilities was $2,521 Mil.
Net Income was -129 + 168 + 183 + 253 = $475 Mil.

Revenue was 1973 + 1975 + 1988 + 2190 = $8,126 Mil.
Gross Profit was 808 + 806 + 795 + 891 = $3,300 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(11714 + 11695 + 11751 + 12043 + 12199) / 5 = $11880.4 Mil.
Total Assets at the begining of last year (Jan13) was $11,714 Mil.
Long-Term Debt was $1,946 Mil.
Total Current Assets was $6,014 Mil.
Total Current Liabilities was $2,477 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.

Applied Materials Inc's current net income (TTM) was 1,167. ==> 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.

Applied Materials Inc's current cash flow from operations (TTM) was 1,488. ==> 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.

Applied Materials Inc's return on assets of this year was 0.09566358. Applied Materials Inc's return on assets of last year was 0.04054977. ==> This year is higher. ==> Score 1.

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.

Applied Materials Inc's current net income (TTM) was 1,167. Applied Materials Inc's current cash flow from operations (TTM) was 1,488. ==> 1,488 > 1,167 ==> 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: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=1947/12770.4
=0.15246194

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=1946/11880.4
=0.1637992

Applied Materials Inc's gearing of this year was 0.15246194. Applied Materials Inc's gearing of last year was 0.1637992. ==> 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: Jan15)=Total Current Assets/Total Current Liabilities
=6933/2521
=2.75009917

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=6014/2477
=2.42793702

Applied Materials Inc's current ratio of this year was 2.75009917. Applied Materials Inc's current ratio of last year was 2.42793702. ==> This year's current ratio is higher. ==> Score 1.

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.

Applied Materials Inc's number of shares in issue this year was 1240. Applied Materials Inc's number of shares in issue last year was 1225. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=3911/9241
=0.42322259

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3300/8126
=0.40610386

Applied Materials Inc's gross margin of this year was 0.42322259. Applied Materials Inc's gross margin of last year was 0.40610386. ==> 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 (Jan14)
=9241/12199
=0.75752111

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=8126/11714
=0.69369985

Applied Materials Inc's asset turnover of this year was 0.75752111. Applied Materials Inc's asset turnover of last year was 0.69369985. ==> 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+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
Question 1 1111011111
Question 2 1111111111
Question 3 0110011011
Question 4 1111111111
Question 5 1101000101
Question 6 0010101011
Question 7 1111101110
Question 8 0100011011
Question 9 0110010001
F-score 5875467578

Applied Materials Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 1100111111
Question 2 1111111111
Question 3 0000111111
Question 4 1111111111
Question 5 1000000111
Question 6 0000111111
Question 7 1111100000
Question 8 0001111111
Question 9 0000011111
F-score 5434777888
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