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EarthLink Holdings Corp (NAS:ELNK)
Piotroski F-Score
6 (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

EarthLink Holdings Corp has an F-score of 6 indicating the company's financial situation is typical for a stable company.

ELNK' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of EarthLink Holdings 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 (Mar16) TTM:Last Year (Mar15) TTM:
Net Income was -9.922 + -10.523 + -12.282 + 7.867 = $-25 Mil.
Cash Flow from Operations was 33.262 + 73.962 + 41.359 + 10.63 = $159 Mil.
Revenue was 283.664 + 270.904 + 260.237 + 254.262 = $1,069 Mil.
Gross Profit was 156.616 + 148.513 + 138.51 + 139.056 = $583 Mil.
Average Total Assets from the begining of this year (Mar15)
to the end of this year (Mar16) was
(856.118 + 799.065 + 768.026 + 734.652 + 662.83) / 5 = $764.1382 Mil.
Total Assets at the begining of this year (Mar15) was $856 Mil.
Long-Term Debt was $469 Mil.
Total Current Assets was $161 Mil.
Total Current Liabilities was $138 Mil.
Net Income was -21.838 + -1.952 + -22.492 + -10.483 = $-57 Mil.

Revenue was 297.358 + 297.745 + 284.472 + 282.447 = $1,162 Mil.
Gross Profit was 153.17 + 162.05 + 152.795 + 152.985 = $621 Mil.
Average Total Assets from the begining of last year (Mar14)
to the end of last year (Mar15) was
(971.242 + 937.841 + 951.115 + 899.196 + 856.118) / 5 = $923.1024 Mil.
Total Assets at the begining of last year (Mar14) was $971 Mil.
Long-Term Debt was $581 Mil.
Total Current Assets was $231 Mil.
Total Current Liabilities was $191 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.

EarthLink Holdings Corp's current net income (TTM) was -25. ==> 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.

EarthLink Holdings Corp's current cash flow from operations (TTM) was 159. ==> 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 (Mar15)
=-24.86/856.118
=-0.02903805

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=-56.765/971.242
=-0.05844578

EarthLink Holdings Corp's return on assets of this year was -0.02903805. EarthLink Holdings Corp's return on assets of last year was -0.05844578. ==> This year is higher. ==> Score 1.

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.

EarthLink Holdings Corp's current net income (TTM) was -25. EarthLink Holdings Corp's current cash flow from operations (TTM) was 159. ==> 159 > -25 ==> 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: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=469.003/764.1382
=0.61376725

Gearing (Last Year: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=580.592/923.1024
=0.62895731

EarthLink Holdings Corp's gearing of this year was 0.61376725. EarthLink Holdings Corp's gearing of last year was 0.62895731. ==> 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: Mar16)=Total Current Assets/Total Current Liabilities
=160.744/137.581
=1.168359

Current Ratio (Last Year: Mar15)=Total Current Assets/Total Current Liabilities
=230.61/190.862
=1.20825518

EarthLink Holdings Corp's current ratio of this year was 1.168359. EarthLink Holdings Corp's current ratio of last year was 1.20825518. ==> 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.

EarthLink Holdings Corp's number of shares in issue this year was 107.7. EarthLink Holdings Corp's number of shares in issue last year was 102.6. ==> 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
=582.695/1069.067
=0.54505003

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=621/1162.022
=0.53441329

EarthLink Holdings Corp's gross margin of this year was 0.54505003. EarthLink Holdings Corp's gross margin of last year was 0.53441329. ==> 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 (Mar15)
=1069.067/856.118
=1.24873791

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=1162.022/971.242
=1.1964289

EarthLink Holdings Corp's asset turnover of this year was 1.24873791. EarthLink Holdings Corp's asset turnover of last year was 1.1964289. ==> 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+1+1+1+0+0+1+1
=6

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

EarthLink Holdings Corp has an F-score of 6 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.

EarthLink Holdings Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1011111000
Question 2 1111111111
Question 3 0011000011
Question 4 1110111111
Question 5 0111001001
Question 6 0010010010
Question 7 1111011110
Question 8 1001000011
Question 9 1010010011
F-score 6486365376

EarthLink Holdings Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Question 1 0000000000
Question 2 1111111111
Question 3 0000111111
Question 4 1111111111
Question 5 0000000011
Question 6 0000111000
Question 7 1111100000
Question 8 0000111111
Question 9 0111111111
F-score 3444766566
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