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Electro Rent Corp (NAS:ELRC)
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

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

ELRC' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 8

4
9

During the past 13 years, the highest Piotroski F-Score of Electro Rent Corp was 9. The lowest was 4. 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 (May14) TTM:Last Year (May13) TTM:
Net Income was 4.593 + 4.537 + 5.581 + 5.697 = $20.4 Mil.
Cash Flow from Operations was 10.852 + 11.993 + 12.357 + 13.984 = $49.2 Mil.
Revenue was 61.077 + 62.016 + 57.876 + 60.168 = $241.1 Mil.
Gross Profit was 36.936 + 35.94 + 37.379 + 37.838 = $148.1 Mil.
Total Assets at the begining of this year (May13) was $318.9 Mil.
Total Assets was $302.1 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $40.9 Mil.
Total Current Liabilities was $71.1 Mil.
Net Income was 6.392 + 5.037 + 6.239 + 5.086 = $22.8 Mil.

Revenue was 60.366 + 64.672 + 65.192 + 58.501 = $248.7 Mil.
Gross Profit was 39.019 + 36.48 + 38.47 + 36.08 = $150.0 Mil.
Total Assets at the begining of last year (May12) was $329.8 Mil.
Total Assets was $318.9 Mil.
Long-Term Debt was $0.0 Mil.
Total Current Assets was $44.8 Mil.
Total Current Liabilities was $90.4 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.

Electro Rent Corp's current net income was 20.4. ==> 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.

Electro Rent Corp's current cash flow from operations was 49.2. ==> 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 (May13)
=20.408/318.926
=0.06398977

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (May12)
=22.754/329.831
=0.06898684

Electro Rent Corp's return on assets of this year was 0.06398977. Electro Rent Corp's return on assets of last year was 0.06898684. ==> Last year is higher ==> Score 0.

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.

Electro Rent Corp's current net income was 20.4. Electro Rent Corp's current cash flow from operations was 49.2. ==> 49.2 > 20.4 ==> 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
=0/302.058
=0

Gearing (Last Year)=Long-Term Debt/Total Assets
=0/318.926
=0

Electro Rent Corp's gearing of this year was 0. Electro Rent Corp's gearing of last year was 0. ==> 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
=40.916/71.1
=0.57547117

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=44.752/90.377
=0.49517023

Electro Rent Corp's current ratio of this year was 0.57547117. Electro Rent Corp's current ratio of last year was 0.49517023. ==> 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.

Electro Rent Corp's number of shares in issue this year was 24.4. Electro Rent Corp's number of shares in issue last year was 24.9. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=148.093/241.137
=0.61414466

Gross Margin (Last Year)=Gross Profit/Revenue
=150.049/248.731
=0.60325814

Electro Rent Corp's gross margin of this year was 0.61414466. Electro Rent Corp's gross margin of last year was 0.60325814. ==> 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 (May13)
=241.137/318.926
=0.75609075

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (May12)
=248.731/329.831
=0.7541165

Electro Rent Corp's asset turnover of this year was 0.75609075. Electro Rent Corp's asset turnover of last year was 0.7541165. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+1+1+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Electro Rent 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.

Electro Rent Corp Annual Data

May04May05May06May07May08May09May10May11May12May13
Q1 1111111111
Q2 1111111111
Q3 1100001100
Q4 1111111111
Q5 1111111111
Q6 0010100000
Q7 0000011000
Q8 1101000001
Q9 0100101100
F-score 6755657645

Electro Rent Corp Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Q1 1111111111
Q2 1111111111
Q3 1000000000
Q4 1111111111
Q5 1111111111
Q6 0000000111
Q7 0100000001
Q8 0111111111
Q9 1000000001
F-score 6655555668
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