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Devon Energy Corp (NYSE:DVN)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

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

DVN' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 5

2
9

During the past 13 years, the highest Piotroski F-Score of Devon Energy Corp was 9. The lowest was 2. 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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 675 + 324 + 207 + 429 = $1,635 Mil.
Cash Flow from Operations was 2049 + 1410 + 1437 + 1601 = $6,497 Mil.
Revenue was 4510 + 3725 + 2614 + 2720 = $13,569 Mil.
Gross Profit was 1922 + 1822 + 1605 + 1737 = $7,086 Mil.
Total Assets at the begining of this year (Jun13) was $40,020 Mil.
Total Assets was $51,115 Mil.
Long-Term Debt was $11,880 Mil.
Total Current Assets was $4,392 Mil.
Total Current Liabilities was $4,679 Mil.
Net Income was 683 + -1339 + -357 + -719 = $-1,732 Mil.

Revenue was 3088 + 1971 + 2581 + 1865 = $9,505 Mil.
Gross Profit was 2147 + 1083 + 1648 + 1039 = $5,917 Mil.
Total Assets at the begining of last year (Jun12) was $43,470 Mil.
Total Assets was $40,020 Mil.
Long-Term Debt was $7,956 Mil.
Total Current Assets was $6,357 Mil.
Total Current Liabilities was $4,865 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.

Devon Energy Corp's current net income was 1,635. ==> 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.

Devon Energy Corp's current cash flow from operations was 6,497. ==> 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.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Jun13)
=1635/40020
=0.04085457

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=-1732/43470
=-0.03984357

Devon Energy Corp's return on assets of this year was 0.04085457. Devon Energy Corp's return on assets of last year was -0.03984357. ==> 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.

Devon Energy Corp's current net income was 1,635. Devon Energy Corp's current cash flow from operations was 6,497. ==> 6,497 > 1,635 ==> 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)=Long-Term Debt/Total Assets
=11880/51115
=0.2324171

Gearing (Last Year)=Long-Term Debt/Total Assets
=7956/40020
=0.1988006

Devon Energy Corp's gearing of this year was 0.2324171. Devon Energy Corp's gearing of last year was 0.1988006. ==> Last year is lower than this year ==> Score 0.

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)=Total Current Assets/Total Current Liabilities
=4392/4679
=0.93866211

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=6357/4865
=1.30668037

Devon Energy Corp's current ratio of this year was 0.93866211. Devon Energy Corp's current ratio of last year was 1.30668037. ==> Last year's current ratio is higher ==> Score 0.

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.

Devon Energy Corp's number of shares in issue this year was 406. Devon Energy Corp's number of shares in issue last year was 403. ==> 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)=Gross Profit/Revenue
=7086/13569
=0.52221977

Gross Margin (Last Year)=Gross Profit/Revenue
=5917/9505
=0.62251447

Devon Energy Corp's gross margin of this year was 0.52221977. Devon Energy Corp's gross margin of last year was 0.62251447. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Jun13)
=13569/40020
=0.33905547

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=9505/43470
=0.21865654

Devon Energy Corp's asset turnover of this year was 0.33905547. Devon Energy Corp's asset turnover of last year was 0.21865654. ==> 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+0+0+0+0+1
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

Devon Energy Corp 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.

Devon Energy Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111001100
Q2 1111111111
Q3 0101001001
Q4 1111111111
Q5 1110001001
Q6 1101001110
Q7 0110101110
Q8 1100101000
Q9 0100101101
F-score 6955529645

Devon Energy Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1110000011
Q2 1111111111
Q3 1000000111
Q4 1111111111
Q5 0000000100
Q6 1011000000
Q7 1111000000
Q8 1100000000
Q9 1000000111
F-score 8554222555
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