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Encana Corp (NYSE:ECA)
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 = 8 or 9
Bad or low score = 0 or 1

Encana Corp has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

ECA' 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 Encana 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 own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 271 + 116 + -251 + 188 = $324 Mil.
Cash Flow from Operations was 767 + 943 + 462 + 935 = $3,107 Mil.
Revenue was 1588 + 1892 + 1423 + 1392 = $6,295 Mil.
Gross Profit was 835 + 1049 + 622 + 691 = $3,197 Mil.
Total Assets at the begining of this year (Jun13) was $18,163 Mil.
Total Assets was $18,722 Mil.
Long-Term Debt was $6,121 Mil.
Total Current Assets was $4,574 Mil.
Total Current Liabilities was $2,226 Mil.
Net Income was 730 + -431 + -80 + -1244 = $-1,025 Mil.

Revenue was 1984 + 1059 + 1605 + 1025 = $5,673 Mil.
Gross Profit was 1281 + 354 + 304 + 643 = $2,582 Mil.
Total Assets at the begining of last year (Jun12) was $20,073 Mil.
Total Assets was $18,163 Mil.
Long-Term Debt was $6,205 Mil.
Total Current Assets was $4,965 Mil.
Total Current Liabilities was $3,156 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.

Encana Corp's current net income was 324. ==> 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.

Encana Corp's current cash flow from operations was 3,107. ==> 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)
=324/18163
=0.01783846

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=-1025/20073
=-0.05106362

Encana Corp's return on assets of this year was 0.01783846. Encana Corp's return on assets of last year was -0.05106362. ==> 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.

Encana Corp's current net income was 324. Encana Corp's current cash flow from operations was 3,107. ==> 3,107 > 324 ==> 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
=6121/18722
=0.32694157

Gearing (Last Year)=Long-Term Debt/Total Assets
=6205/18163
=0.34162859

Encana Corp's gearing of this year was 0.32694157. Encana Corp's gearing of last year was 0.34162859. ==> This year is lower or equal to last year. ==> Score 1.

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
=4574/2226
=2.05480683

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=4965/3156
=1.57319392

Encana Corp's current ratio of this year was 2.05480683. Encana Corp's current ratio of last year was 1.57319392. ==> This year's current ratio is higher. ==> Score 1.

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.

Encana Corp's number of shares in issue this year was 741. Encana Corp's number of shares in issue last year was 736.1. ==> 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
=3197/6295
=0.50786338

Gross Margin (Last Year)=Gross Profit/Revenue
=2582/5673
=0.45513837

Encana Corp's gross margin of this year was 0.50786338. Encana Corp's gross margin of last year was 0.45513837. ==> This year's gross margin is higher. ==> Score 1.

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)
=6295/18163
=0.34658371

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=5673/20073
=0.28261844

Encana Corp's asset turnover of this year was 0.34658371. Encana Corp's asset turnover of last year was 0.28261844. ==> 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+1+1+0+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Encana Corp 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.

Encana Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 111111101
Q2 111111111
Q3 010101001
Q4 111111111
Q5 110011001
Q6 010100110
Q7 111111110
Q8 110111000
Q9 011101001
F-score 695868546

Encana Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1000001111
Q2 1111111111
Q3 0000001111
Q4 1111111111
Q5 0000011111
Q6 1111000001
Q7 1111110000
Q8 1110000111
Q9 1000011111
F-score 7654366778
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