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Apache Corporation (NYSE:APA)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

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

Apache Corporation has an F-score of 5 indicating the company's financial situation is typical for a stable company.

APA' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 5

4
8

During the past 13 years, the highest Piotroski F-Score of Apache Corporation was 8. The lowest was 4. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 236 + 505 + -1330 + -4814 = $-5,403 Mil.
Cash Flow from Operations was 2293 + 2339 + 1896 + 1933 = $8,461 Mil.
Revenue was 3675 + 3484 + 3740 + 2952 = $13,851 Mil.
Gross Profit was 3008 + 2805 + 3021 + 2265 = $11,099 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(61637 + 61121 + 61171 + 60990 + 55952) / 5 = $60174.2 Mil.
Total Assets at the begining of this year (Dec13) was $61,637 Mil.
Long-Term Debt was $11,245 Mil.
Total Current Assets was $6,415 Mil.
Total Current Liabilities was $3,664 Mil.
Net Income was 698 + 1035 + 306 + 174 = $2,213 Mil.

Revenue was 3946 + 4268 + 3900 + 3446 = $15,560 Mil.
Gross Profit was 3151 + 3410 + 3047 + 2800 = $12,408 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(60737 + 61792 + 63350 + 60239 + 61637) / 5 = $61551 Mil.
Total Assets at the begining of last year (Dec12) was $60,737 Mil.
Long-Term Debt was $9,672 Mil.
Total Current Assets was $6,366 Mil.
Total Current Liabilities was $4,700 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.

Apache Corporation's current net income (TTM) was -5,403. ==> Negative ==> Score 0.

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.

Apache Corporation's current cash flow from operations (TTM) was 8,461. ==> 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.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Dec13)
=-5403/61637
=-0.08765839

Apache Corporation's return on assets of this year was -0.08765839. Apache Corporation's return on assets of last year was 0.03643578. ==> Last year is higher ==> Score 0.

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.

Apache Corporation's current net income (TTM) was -5,403. Apache Corporation's current cash flow from operations (TTM) was 8,461. ==> 8,461 > -5,403 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=11245/60174.2
=0.18687411

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=9672/61551
=0.15713798

Apache Corporation's gearing of this year was 0.18687411. Apache Corporation's gearing of last year was 0.15713798. ==> Last year is lower than this year ==> Score 0.

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: Dec14)=Total Current Assets/Total Current Liabilities
=6415/3664
=1.75081878

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=6366/4700
=1.35446809

Apache Corporation's current ratio of this year was 1.75081878. Apache Corporation's current ratio of last year was 1.35446809. ==> 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.

Apache Corporation's number of shares in issue this year was 375. Apache Corporation's number of shares in issue last year was 403. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=11099/13851
=0.80131398

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=12408/15560
=0.79742931

Apache Corporation's gross margin of this year was 0.80131398. Apache Corporation's gross margin of last year was 0.79742931. ==> 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 (Dec13)
=13851/61637
=0.22471892

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=15560/60737
=0.25618651

Apache Corporation's asset turnover of this year was 0.22471892. Apache Corporation's asset turnover of last year was 0.25618651. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=0+1+0+1+0+1+1+1+0
=5

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

Apache Corporation has an F-score of 5 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


Historical Data

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

Apache Corporation Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111011110
Question 2 1111111111
Question 3 1000010000
Question 4 1111111111
Question 5 1100001010
Question 6 0011100011
Question 7 0100100101
Question 8 1001011001
Question 9 1001010000
F-score 7546465455

Apache Corporation Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111100
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 0000111100
Question 6 0001111101
Question 7 1100001111
Question 8 0000001111
Question 9 0000000000
F-score 4434557745
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