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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 own currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Net Income was 256 + 124 + 251 + 255 = $886 Mil.
Cash Flow from Operations was 368 + 562 + 47 + 494 = $1,471 Mil.
Revenue was 2447 + 2225 + 2236 + 2297 = $9,205 Mil.
Gross Profit was 695 + 509 + 634 + 605 = $2,443 Mil.
Average Total Assets from the begining of this year (Jun15)
to the end of this year (Jun16) was
(15886 + 15880 + 15611 + 15616 + 15582) / 5 = $15715 Mil.
Total Assets at the begining of this year (Jun15) was $15,886 Mil.
Long-Term Debt was $6,082 Mil.
Total Current Assets was $2,930 Mil.
Total Current Liabilities was $2,189 Mil.
Net Income was 210 + 16 + 171 + 297 = $694 Mil.

Revenue was 2413 + 2349 + 2443 + 2533 = $9,738 Mil.
Gross Profit was 636 + 333 + 656 + 720 = $2,345 Mil.
Average Total Assets from the begining of last year (Jun14)
to the end of last year (Jun15) was
(12238 + 12135 + 16072 + 15834 + 15886) / 5 = $14433 Mil.
Total Assets at the begining of last year (Jun14) was $12,238 Mil.
Long-Term Debt was $7,072 Mil.
Total Current Assets was $3,167 Mil.
Total Current Liabilities was $1,821 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 886. ==> 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 1,471. ==> 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 0.05577238. Eastman Chemical Co's return on assets of last year was 0.05670861. ==> 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 886. Eastman Chemical Co's current cash flow from operations (TTM) was 1,471. ==> 1,471 > 886 ==> 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: Jun16)=Long-Term Debt/Average Total Assets from Jun15 to Jun16
=6082/15715
=0.38701877

Gearing (Last Year: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=7072/14433
=0.48998822

Eastman Chemical Co's gearing of this year was 0.38701877. Eastman Chemical Co's gearing of last year was 0.48998822. ==> 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: Jun16)=Total Current Assets/Total Current Liabilities
=2930/2189
=1.33851074

Current Ratio (Last Year: Jun15)=Total Current Assets/Total Current Liabilities
=3167/1821
=1.73915431

Eastman Chemical Co's current ratio of this year was 1.33851074. Eastman Chemical Co's current ratio of last year was 1.73915431. ==> 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 148.9. 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
=2443/9205
=0.26539924

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2345/9738
=0.2408092

Eastman Chemical Co's gross margin of this year was 0.26539924. Eastman Chemical Co's gross margin of last year was 0.2408092. ==> 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 (Jun15)
=9205/15886
=0.57944102

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun14)
=9738/12238
=0.79571825

Eastman Chemical Co's asset turnover of this year was 0.57944102. Eastman Chemical Co's asset turnover of last year was 0.79571825. ==> 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 own 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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
Question 1 1111111111
Question 2 1111111111
Question 3 1110000010
Question 4 1111111111
Question 5 1100000111
Question 6 1100000000
Question 7 1111111111
Question 8 1110000111
Question 9 0011101000
F-score 8875545676
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