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Eastman Chemical Co (NYSE:EMN)
Piotroski F-Score
5 (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 5 indicating the company's financial situation is typical for a stable company.

EMN' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 5

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 (Mar15) TTM:Last Year (Mar14) TTM:
Net Income was 292 + 210 + 16 + 171 = $689 Mil.
Cash Flow from Operations was 419 + 560 + 459 + 91 = $1,529 Mil.
Revenue was 2460 + 2413 + 2349 + 2443 = $9,665 Mil.
Gross Profit was 657 + 636 + 333 + 656 = $2,282 Mil.
Average Total Assets from the begining of this year (Mar14)
to the end of this year (Mar15) was
(11947 + 12238 + 12135 + 16072 + 15834) / 5 = $13645.2 Mil.
Total Assets at the begining of this year (Mar14) was $11,947 Mil.
Long-Term Debt was $7,293 Mil.
Total Current Assets was $3,166 Mil.
Total Current Liabilities was $1,764 Mil.
Net Income was 264 + 308 + 346 + 233 = $1,151 Mil.

Revenue was 2440 + 2338 + 2265 + 2305 = $9,348 Mil.
Gross Profit was 677 + 689 + 794 + 595 = $2,755 Mil.
Average Total Assets from the begining of last year (Mar13)
to the end of last year (Mar14) was
(11687 + 11762 + 11727 + 11845 + 11947) / 5 = $11793.6 Mil.
Total Assets at the begining of last year (Mar13) was $11,687 Mil.
Long-Term Debt was $4,635 Mil.
Total Current Assets was $2,949 Mil.
Total Current Liabilities was $1,259 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 689. ==> 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 1,529. ==> 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 0.05767138. Eastman Chemical Co's return on assets of last year was 0.0984855. ==> 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 689. Eastman Chemical Co's current cash flow from operations (TTM) was 1,529. ==> 1,529 > 689 ==> 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: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=7293/13645.2
=0.53447366

Gearing (Last Year: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=4635/11793.6
=0.39300977

Eastman Chemical Co's gearing of this year was 0.53447366. Eastman Chemical Co's gearing of last year was 0.39300977. ==> Last year is lower than this year ==> Score 0.

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: Mar15)=Total Current Assets/Total Current Liabilities
=3166/1764
=1.79478458

Current Ratio (Last Year: Mar14)=Total Current Assets/Total Current Liabilities
=2949/1259
=2.34233519

Eastman Chemical Co's current ratio of this year was 1.79478458. Eastman Chemical Co's current ratio of last year was 2.34233519. ==> 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 149.7. Eastman Chemical Co's number of shares in issue last year was 153. ==> 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
=2282/9665
=0.23610967

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2755/9348
=0.29471545

Eastman Chemical Co's gross margin of this year was 0.23610967. Eastman Chemical Co's gross margin of last year was 0.29471545. ==> Last year's gross margin is higher ==> Score 0.

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 (Mar14)
=9665/11947
=0.8089897

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=9348/11687
=0.7998631

Eastman Chemical Co's asset turnover of this year was 0.8089897. Eastman Chemical Co's asset turnover of last year was 0.7998631. ==> 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
=1+1+0+1+0+0+1+0+1
=5

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

Eastman Chemical Co 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.

Eastman Chemical Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1001011010
Question 4 1111110111
Question 5 1110011010
Question 6 1100101000
Question 7 0001111001
Question 8 1000110010
Question 9 1101011101
F-score 8646687465

Eastman Chemical Co Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 0000111100
Question 4 1111111111
Question 5 0011111000
Question 6 0001011000
Question 7 0001111111
Question 8 0111111100
Question 9 1100000111
F-score 4557788755
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