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ARRIS International PLC (NAS:ARRS)
Piotroski F-Score
6 (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

ARRIS International PLC has an F-score of 6 indicating the company's financial situation is typical for a stable company.

ARRS' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 6

2
9

During the past 13 years, the highest Piotroski F-Score of ARRIS International PLC was 9. The lowest was 2. 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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 192.76 + 19.126 + 16.758 + 26.257 = $255 Mil.
Cash Flow from Operations was 130.045 + -63.263 + 71.856 + 215.905 = $355 Mil.
Revenue was 1263.387 + 1215.158 + 1260.077 + 1221.416 = $4,960 Mil.
Gross Profit was 380.575 + 336.556 + 364.361 + 359.333 = $1,441 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(4305.244 + 4365.645 + 4472.786 + 4558.675 + 4513.24) / 5 = $4443.118 Mil.
Total Assets at the begining of this year (Sep14) was $4,305 Mil.
Long-Term Debt was $1,525 Mil.
Total Current Assets was $2,118 Mil.
Total Current Liabilities was $1,019 Mil.
Net Income was -2.817 + 40.8 + 39.024 + 54.626 = $132 Mil.

Revenue was 1199.067 + 1225.017 + 1429.071 + 1405.445 = $5,259 Mil.
Gross Profit was 366.371 + 346.774 + 419.412 + 435.734 = $1,568 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(4585.954 + 4322.007 + 4345.029 + 4330.82 + 4305.244) / 5 = $4377.8108 Mil.
Total Assets at the begining of last year (Sep13) was $4,586 Mil.
Long-Term Debt was $1,488 Mil.
Total Current Assets was $1,848 Mil.
Total Current Liabilities was $1,122 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.

ARRIS International PLC's current net income (TTM) was 255. ==> 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.

ARRIS International PLC's current cash flow from operations (TTM) was 355. ==> 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 (Sep14)
=254.901/4305.244
=0.0592071

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=131.633/4585.954
=0.02870352

ARRIS International PLC's return on assets of this year was 0.0592071. ARRIS International PLC's return on assets of last year was 0.02870352. ==> 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.

ARRIS International PLC's current net income (TTM) was 255. ARRIS International PLC's current cash flow from operations (TTM) was 355. ==> 355 > 255 ==> 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: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=1525.454/4443.118
=0.34332962

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=1487.585/4377.8108
=0.33980112

ARRIS International PLC's gearing of this year was 0.34332962. ARRIS International PLC's gearing of last year was 0.33980112. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=2118.442/1019.331
=2.07826702

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=1848.388/1121.934
=1.64750155

ARRIS International PLC's current ratio of this year was 2.07826702. ARRIS International PLC's current ratio of last year was 1.64750155. ==> 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.

ARRIS International PLC's number of shares in issue this year was 149.4. ARRIS International PLC's number of shares in issue last year was 148.8. ==> 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
=1440.825/4960.038
=0.29048669

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1568.291/5258.6
=0.29823356

ARRIS International PLC's gross margin of this year was 0.29048669. ARRIS International PLC's gross margin of last year was 0.29823356. ==> Last year's gross margin is higher ==> Score 0.

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 (Sep14)
=4960.038/4305.244
=1.15209219

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=5258.6/4585.954
=1.14667526

ARRIS International PLC's asset turnover of this year was 1.15209219. ARRIS International PLC's asset turnover of last year was 1.14667526. ==> 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+0+1+0+0+1
=6

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

ARRIS International PLC has an F-score of 6 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.

ARRIS International PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1110110101
Question 2 1111111111
Question 3 1100100101
Question 4 0101111111
Question 5 1011010101
Question 6 1101110001
Question 7 0000001100
Question 8 0101100001
Question 9 1100101110
F-score 6735754737

ARRIS International PLC Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 0001111111
Question 2 1111111111
Question 3 0000111111
Question 4 1111111101
Question 5 0000111100
Question 6 0000111111
Question 7 0000000000
Question 8 0000111110
Question 9 1111000011
F-score 3334777766
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