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GuruFocus has detected 6 Warning Signs with Chevron Corp $CVX.
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Chevron Corp (NYSE:CVX)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Chevron Corp has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

CVX' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 3

3
9

During the past 13 years, the highest Piotroski F-Score of Chevron Corp 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 local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Net Income was -725 + -1470 + 1283 + 415 = $-497 Mil.
Cash Flow from Operations was 1141 + 2531 + 5311 + 3863 = $12,846 Mil.
Revenue was 23553 + 29282 + 30140 + 31497 = $114,472 Mil.
Gross Profit was 6924 + 12220 + 9632 + 9377 = $38,153 Mil.
Average Total Assets from the begining of this year (Dec15)
to the end of this year (Dec16) was
(264540 + 263842 + 261478 + 259863 + 260078) / 5 = $261960.2 Mil.
Total Assets at the begining of this year (Dec15) was $264,540 Mil.
Long-Term Debt was $35,286 Mil.
Total Current Assets was $29,619 Mil.
Total Current Liabilities was $31,785 Mil.
Net Income was 2567 + 571 + 2037 + -588 = $4,587 Mil.

Revenue was 34558 + 40357 + 34315 + 29247 = $138,477 Mil.
Gross Profit was 11970 + 17851 + 11276 + 8707 = $49,804 Mil.
Average Total Assets from the begining of last year (Dec14)
to the end of last year (Dec15) was
(266026 + 269604 + 266455 + 268449 + 264540) / 5 = $267014.8 Mil.
Total Assets at the begining of last year (Dec14) was $266,026 Mil.
Long-Term Debt was $33,622 Mil.
Total Current Assets was $34,430 Mil.
Total Current Liabilities was $25,467 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.

Chevron Corp's current net income (TTM) was -497. ==> 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.

Chevron Corp's current cash flow from operations (TTM) was 12,846. ==> 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 (Dec15)
=-497/264540
=-0.00187873

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=4587/266026
=0.01724268

Chevron Corp's return on assets of this year was -0.00187873. Chevron Corp's return on assets of last year was 0.01724268. ==> 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.

Chevron Corp's current net income (TTM) was -497. Chevron Corp's current cash flow from operations (TTM) was 12,846. ==> 12,846 > -497 ==> 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: Dec16)=Long-Term Debt/Average Total Assets from Dec15 to Dec16
=35286/261960.2
=0.13469985

Gearing (Last Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=33622/267014.8
=0.12591811

Chevron Corp's gearing of this year was 0.13469985. Chevron Corp's gearing of last year was 0.12591811. ==> 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: Dec16)=Total Current Assets/Total Current Liabilities
=29619/31785
=0.93185465

Current Ratio (Last Year: Dec15)=Total Current Assets/Total Current Liabilities
=34430/25467
=1.35194566

Chevron Corp's current ratio of this year was 0.93185465. Chevron Corp's current ratio of last year was 1.35194566. ==> Last year's current ratio is higher ==> Score 0.

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.

Chevron Corp's number of shares in issue this year was 1873. Chevron Corp's number of shares in issue last year was 1875. ==> 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
=38153/114472
=0.33329548

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=49804/138477
=0.35965539

Chevron Corp's gross margin of this year was 0.33329548. Chevron Corp's gross margin of last year was 0.35965539. ==> 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 (Dec15)
=114472/264540
=0.43272095

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=138477/266026
=0.52053935

Chevron Corp's asset turnover of this year was 0.43272095. Chevron Corp's asset turnover of last year was 0.52053935. ==> 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+0+1+0+0
=3

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

Chevron Corp has an F-score of 3. It is a bad or low score, which usually implies poor business operation.


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 local exchange's currency.

Chevron Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 1111111110
Question 2 1111111111
Question 3 1101100000
Question 4 1111111111
Question 5 1100100000
Question 6 0011010010
Question 7 1110111111
Question 8 0001110110
Question 9 0101100000
F-score 6757864563

Chevron Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Question 1 1111111000
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 0000000000
Question 6 0011110000
Question 7 1111111101
Question 8 1101111000
Question 9 0000000000
F-score 5556665323
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