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Emerson Electric Co (NYSE:EMR)
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

Emerson Electric Co has an F-score of 5 indicating the company's financial situation is typical for a stable company.

EMR' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 5

3
9

During the past 13 years, the highest Piotroski F-Score of Emerson Electric Co was 9. The lowest was 3. And the median was 7.


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 (Mar16) TTM:Last Year (Mar15) TTM:
Net Income was 564 + 648 + 349 + 369 = $1,930 Mil.
Cash Flow from Operations was 499 + 1101 + 487 + 719 = $2,806 Mil.
Revenue was 5503 + 5814 + 4713 + 4928 = $20,958 Mil.
Gross Profit was 2234 + 2368 + 1889 + 1994 = $8,485 Mil.
Average Total Assets from the begining of this year (Mar15)
to the end of this year (Mar16) was
(22968 + 23464 + 22088 + 21552 + 21764) / 5 = $22367.2 Mil.
Total Assets at the begining of this year (Mar15) was $22,968 Mil.
Long-Term Debt was $4,062 Mil.
Total Current Assets was $9,913 Mil.
Total Current Liabilities was $8,182 Mil.
Net Income was 728 + 410 + 525 + 973 = $2,636 Mil.

Revenue was 6312 + 6807 + 5587 + 5400 = $24,106 Mil.
Gross Profit was 2638 + 2889 + 2280 + 2166 = $9,973 Mil.
Average Total Assets from the begining of last year (Mar14)
to the end of last year (Mar15) was
(24346 + 25115 + 24177 + 23724 + 22968) / 5 = $24066 Mil.
Total Assets at the begining of last year (Mar14) was $24,346 Mil.
Long-Term Debt was $3,272 Mil.
Total Current Assets was $10,344 Mil.
Total Current Liabilities was $8,770 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.

Emerson Electric Co's current net income (TTM) was 1,930. ==> 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.

Emerson Electric Co's current cash flow from operations (TTM) was 2,806. ==> 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.

Emerson Electric Co's return on assets of this year was 0.08402995. Emerson Electric Co's return on assets of last year was 0.10827241. ==> 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.

Emerson Electric Co's current net income (TTM) was 1,930. Emerson Electric Co's current cash flow from operations (TTM) was 2,806. ==> 2,806 > 1,930 ==> 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: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=4062/22367.2
=0.18160521

Gearing (Last Year: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=3272/24066
=0.13595944

Emerson Electric Co's gearing of this year was 0.18160521. Emerson Electric Co's gearing of last year was 0.13595944. ==> 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: Mar16)=Total Current Assets/Total Current Liabilities
=9913/8182
=1.21156197

Current Ratio (Last Year: Mar15)=Total Current Assets/Total Current Liabilities
=10344/8770
=1.17947548

Emerson Electric Co's current ratio of this year was 1.21156197. Emerson Electric Co's current ratio of last year was 1.17947548. ==> This year's current ratio is higher. ==> Score 1.

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.

Emerson Electric Co's number of shares in issue this year was 644.7. Emerson Electric Co's number of shares in issue last year was 684.1. ==> 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
=8485/20958
=0.40485733

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=9973/24106
=0.41371443

Emerson Electric Co's gross margin of this year was 0.40485733. Emerson Electric Co's gross margin of last year was 0.41371443. ==> 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 (Mar15)
=20958/22968
=0.91248694

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar14)
=24106/24346
=0.99014212

Emerson Electric Co's asset turnover of this year was 0.91248694. Emerson Electric Co's asset turnover of last year was 0.99014212. ==> 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+0+1+1+0+0
=5

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

Emerson Electric 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.

Emerson Electric Co Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
Question 1 1111111111
Question 2 1111111111
Question 3 1110100111
Question 4 1111111110
Question 5 1110011010
Question 6 0101010101
Question 7 1111111111
Question 8 1111101110
Question 9 1110100100
F-score 8986766875

Emerson Electric Co Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
Question 1 1111111111
Question 2 1111111111
Question 3 0111101100
Question 4 1111110011
Question 5 1111100000
Question 6 0000011110
Question 7 1111111111
Question 8 1111110000
Question 9 1100000000
F-score 7877765554
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