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Eastman Chemical Co (NYSE:EMN)
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

Eastman Chemical Co has an F-score of 6 indicating the company's financial situation is typical for a stable company.

EMN' 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 Eastman Chemical Co 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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 124 + 251 + 255 + 232 = $862 Mil.
Cash Flow from Operations was 562 + 47 + 494 + 450 = $1,553 Mil.
Revenue was 2225 + 2236 + 2297 + 2287 = $9,045 Mil.
Gross Profit was 509 + 634 + 605 + 621 = $2,369 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(15880 + 15580 + 15616 + 15582 + 15489) / 5 = $15629.4 Mil.
Total Assets at the begining of this year (Sep15) was $15,880 Mil.
Long-Term Debt was $5,933 Mil.
Total Current Assets was $2,900 Mil.
Total Current Liabilities was $2,206 Mil.
Net Income was 16 + 171 + 297 + 256 = $740 Mil.

Revenue was 2349 + 2443 + 2533 + 2447 = $9,772 Mil.
Gross Profit was 333 + 656 + 720 + 695 = $2,404 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(12135 + 16072 + 15834 + 15886 + 15880) / 5 = $15161.4 Mil.
Total Assets at the begining of last year (Sep14) was $12,135 Mil.
Long-Term Debt was $7,029 Mil.
Total Current Assets was $3,182 Mil.
Total Current Liabilities was $1,800 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.

Eastman Chemical Co's current net income (TTM) was 862. ==> Positive ==> Score 1.

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.

Eastman Chemical Co's current cash flow from operations (TTM) was 1,553. ==> 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.

Eastman Chemical Co's return on assets of this year was 0.05428212. Eastman Chemical Co's return on assets of last year was 0.06098063. ==> 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.

Eastman Chemical Co's current net income (TTM) was 862. Eastman Chemical Co's current cash flow from operations (TTM) was 1,553. ==> 1,553 > 862 ==> 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=5933/15629.4
=0.3796051

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=7029/15161.4
=0.46361154

Eastman Chemical Co's gearing of this year was 0.3796051. Eastman Chemical Co's gearing of last year was 0.46361154. ==> 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: Sep16)=Total Current Assets/Total Current Liabilities
=2900/2206
=1.31459655

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=3182/1800
=1.76777778

Eastman Chemical Co's current ratio of this year was 1.31459655. Eastman Chemical Co's current ratio of last year was 1.76777778. ==> 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.

Eastman Chemical Co's number of shares in issue this year was 148.2. Eastman Chemical Co's number of shares in issue last year was 149.8. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=2369/9045
=0.26191266

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2404/9772
=0.24600901

Eastman Chemical Co's gross margin of this year was 0.26191266. Eastman Chemical Co's gross margin of last year was 0.24600901. ==> 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 (Sep15)
=9045/15880
=0.56958438

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=9772/12135
=0.805274

Eastman Chemical Co's asset turnover of this year was 0.56958438. Eastman Chemical Co's asset turnover of last year was 0.805274. ==> 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
=1+1+0+1+1+0+1+1+0
=6

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

Eastman Chemical Co 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 local exchange's currency.

Eastman Chemical Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 0010110100
Question 4 1111101111
Question 5 1100110101
Question 6 1001010000
Question 7 0011110011
Question 8 0001100101
Question 9 1010111010
F-score 6466874656

Eastman Chemical Co Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 1100000100
Question 4 1111111111
Question 5 1000001111
Question 6 1000000000
Question 7 1111111111
Question 8 1100001111
Question 9 0111010000
F-score 8755456766
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