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Encana Corp (NYSE:ECA)
Piotroski F-Score
4 (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

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

ECA' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 4

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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 2807 + 198 + -1707 + -1610 = $-312 Mil.
Cash Flow from Operations was 696 + 261 + 482 + 298 = $1,737 Mil.
Revenue was 2285 + 2254 + 1249 + 830 = $6,618 Mil.
Gross Profit was 1234 + 1337 + 580 + 216 = $3,367 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(18722 + 21334 + 24621 + 22836 + 19043) / 5 = $21311.2 Mil.
Total Assets at the begining of this year (Jun14) was $18,722 Mil.
Long-Term Debt was $6,112 Mil.
Total Current Assets was $2,097 Mil.
Total Current Liabilities was $1,807 Mil.
Net Income was 188 + -251 + 116 + 271 = $324 Mil.

Revenue was 1392 + 1423 + 1892 + 1588 = $6,295 Mil.
Gross Profit was 691 + 622 + 1049 + 835 = $3,197 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(18163 + 18383 + 17648 + 17192 + 18722) / 5 = $18021.6 Mil.
Total Assets at the begining of last year (Jun13) was $18,163 Mil.
Long-Term Debt was $6,121 Mil.
Total Current Assets was $4,574 Mil.
Total Current Liabilities was $2,226 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 -312. ==> 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 1,737. ==> 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 (Jun14)
=-312/18722
=-0.01666489

Encana Corp's return on assets of this year was -0.01666489. Encana Corp's return on assets of last year was 0.01783846. ==> 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 -312. Encana Corp's current cash flow from operations (TTM) was 1,737. ==> 1,737 > -312 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=6112/21311.2
=0.28679755

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=6121/18021.6
=0.33964798

Encana Corp's gearing of this year was 0.28679755. Encana Corp's gearing of last year was 0.33964798. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=2097/1807
=1.160487

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=4574/2226
=2.05480683

Encana Corp's current ratio of this year was 1.160487. Encana Corp's current ratio of last year was 2.05480683. ==> 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 841.2. Encana Corp's number of shares in issue last year was 741. ==> 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
=3367/6618
=0.50876398

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3197/6295
=0.50786338

Encana Corp's gross margin of this year was 0.50876398. Encana Corp's gross margin of last year was 0.50786338. ==> This year's gross margin is higher. ==> Score 1.

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 (Jun14)
=6618/18722
=0.35348788

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=6295/18163
=0.34658371

Encana Corp's asset turnover of this year was 0.35348788. Encana Corp's asset turnover of last year was 0.34658371. ==> 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
=0+1+0+1+1+0+0+1+1
=5

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

Encana 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.

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 1101010100
Question 8 1101010001
Question 9 1010010011
F-score 7848464455

Encana Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 0011111110
Question 2 1111111111
Question 3 0011111110
Question 4 1111110011
Question 5 0000101011
Question 6 0000011000
Question 7 1100000000
Question 8 0010100101
Question 9 0111111111
F-score 3465766565
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