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Encana Corp (NYSE:ECA)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 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

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

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

2
9

During the past 13 years, the highest Piotroski F-Score of Encana 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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 198 + -1707 + -1610 + -1236 = $-4,355 Mil.
Cash Flow from Operations was 261 + 482 + 298 + 453 = $1,494 Mil.
Revenue was 2254 + 1249 + 830 + 1312 = $5,645 Mil.
Gross Profit was 1373 + 599 + 242 + 743 = $2,957 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(21334 + 24621 + 22836 + 19043 + 17294) / 5 = $21025.6 Mil.
Total Assets at the begining of this year (Sep14) was $21,334 Mil.
Long-Term Debt was $6,506 Mil.
Total Current Assets was $1,871 Mil.
Total Current Liabilities was $1,594 Mil.
Net Income was -251 + 116 + 271 + 2807 = $2,943 Mil.

Revenue was 1423 + 1892 + 1588 + 2285 = $7,188 Mil.
Gross Profit was 659 + 1096 + 868 + 1251 = $3,874 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(18383 + 17648 + 17192 + 18722 + 21334) / 5 = $18655.8 Mil.
Total Assets at the begining of last year (Sep13) was $18,383 Mil.
Long-Term Debt was $6,086 Mil.
Total Current Assets was $8,969 Mil.
Total Current Liabilities was $2,178 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.

Encana Corp's current net income (TTM) was -4,355. ==> 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.

Encana Corp's current cash flow from operations (TTM) was 1,494. ==> 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)
=-4355/21334
=-0.20413425

Encana Corp's return on assets of this year was -0.20413425. Encana Corp's return on assets of last year was 0.16009356. ==> 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.

Encana Corp's current net income (TTM) was -4,355. Encana Corp's current cash flow from operations (TTM) was 1,494. ==> 1,494 > -4,355 ==> 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
=6506/21025.6
=0.30943231

Gearing (Last Year: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=6086/18655.8
=0.32622562

Encana Corp's gearing of this year was 0.30943231. Encana Corp's gearing of last year was 0.32622562. ==> This year is lower or equal to last year. ==> Score 1.

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
=1871/1594
=1.17377666

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=8969/2178
=4.11799816

Encana Corp's current ratio of this year was 1.17377666. Encana Corp's current ratio of last year was 4.11799816. ==> 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.

Encana Corp's number of shares in issue this year was 843.1. Encana Corp's number of shares in issue last year was 741.1. ==> 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
=2957/5645
=0.5238264

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3874/7188
=0.53895381

Encana Corp's gross margin of this year was 0.5238264. Encana Corp's gross margin of last year was 0.53895381. ==> 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)
=5645/21334
=0.26460111

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep13)
=7188/18383
=0.39101344

Encana Corp's asset turnover of this year was 0.26460111. Encana Corp's asset turnover of last year was 0.39101344. ==> 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+1+0+0+0+0
=3

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

Encana 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 own currency.

Encana Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111011
Question 2 1111111111
Question 3 0101010011
Question 4 1111101110
Question 5 1101100000
Question 6 0101001100
Question 7 1111111100
Question 8 1101011001
Question 9 1010010011
F-score 7858566455

Encana Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
Question 1 0111111100
Question 2 1111111111
Question 3 0111111100
Question 4 1111100111
Question 5 0001010111
Question 6 0000110000
Question 7 1000000000
Question 8 0001001000
Question 9 1111111110
F-score 4557665643
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