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Eastman Chemical Co (NYSE:EMN)
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

Eastman Chemical Co has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

EMN' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 8

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 own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 233 + 346 + 308 + 264 = $1,151 Mil.
Cash Flow from Operations was -30 + 503 + 427 + 362 = $1,262 Mil.
Revenue was 2305 + 2265 + 2338 + 2440 = $9,348 Mil.
Gross Profit was 595 + 794 + 689 + 677 = $2,755 Mil.
Total Assets at the begining of this year (Mar13) was $11,687 Mil.
Total Assets was $11,947 Mil.
Long-Term Debt was $4,635 Mil.
Total Current Assets was $2,949 Mil.
Total Current Liabilities was $1,259 Mil.
Net Income was 247 + -54 + 154 + 179 = $526 Mil.

Revenue was 2307 + 2169 + 2259 + 1853 = $8,588 Mil.
Gross Profit was 616 + 325 + 525 + 481 = $1,947 Mil.
Total Assets at the begining of last year (Mar12) was $6,191 Mil.
Total Assets was $11,687 Mil.
Long-Term Debt was $4,779 Mil.
Total Current Assets was $2,737 Mil.
Total Current Liabilities was $1,293 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.

Eastman Chemical Co's current net income was 1,151. ==> 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.

Eastman Chemical Co's current cash flow from operations was 1,262. ==> 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 (Mar13)
=1151/11687
=0.0984855

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=526/6191
=0.08496204

Eastman Chemical Co's return on assets of this year was 0.0984855. Eastman Chemical Co's return on assets of last year was 0.08496204. ==> This year is higher. ==> Score 1.

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.

Eastman Chemical Co's current net income was 1,151. Eastman Chemical Co's current cash flow from operations was 1,262. ==> 1,262 > 1,151 ==> 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
=4635/11947
=0.38796351

Gearing (Last Year)=Long-Term Debt/Total Assets
=4779/11687
=0.40891589

Eastman Chemical Co's gearing of this year was 0.38796351. Eastman Chemical Co's gearing of last year was 0.40891589. ==> 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
=2949/1259
=2.34233519

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2737/1293
=2.11678268

Eastman Chemical Co's current ratio of this year was 2.34233519. Eastman Chemical Co's current ratio of last year was 2.11678268. ==> 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.

Eastman Chemical Co's number of shares in issue this year was 153. Eastman Chemical Co's number of shares in issue last year was 156.7. ==> 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
=2755/9348
=0.29471545

Gross Margin (Last Year)=Gross Profit/Revenue
=1947/8588
=0.22671169

Eastman Chemical Co's gross margin of this year was 0.29471545. Eastman Chemical Co's gross margin of last year was 0.22671169. ==> 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 (Mar13)
=9348/11687
=0.7998631

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=8588/6191
=1.38717493

Eastman Chemical Co's asset turnover of this year was 0.7998631. Eastman Chemical Co's asset turnover of last year was 1.38717493. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Eastman Chemical Co 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.

Eastman Chemical Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1100101101
Q4 1111111011
Q5 0111001101
Q6 1110010100
Q7 0000111100
Q8 1100011001
Q9 1110101110
F-score 7864668746

Eastman Chemical Co Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 1000000011
Q4 0111111111
Q5 1100001111
Q6 1010000101
Q7 1110000111
Q8 0000011111
Q9 1111110000
F-score 7664455778
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