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Equity Residential (NYSE:EQR)
Piotroski F-Score
4 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Equity Residential has an F-score of 4 indicating the company's financial situation is typical for a stable company.

EQR' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 4

2
8

During the past 13 years, the highest Piotroski F-Score of Equity Residential was 8. The lowest was 2. And the median was 5.


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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 112.69 + 79.135 + 110.976 + 377.192 = $680 Mil.
Cash Flow from Operations was 282.633 + 336.903 + 101.823 + 349.274 = $1,071 Mil.
Revenue was 652.568 + 633.442 + 630.929 + 629.446 = $2,546 Mil.
Gross Profit was 432.192 + 401.995 + 416.78 + 413.168 = $1,664 Mil.
Total Assets at the begining of this year (Jun13) was $23,482 Mil.
Total Assets was $22,991 Mil.
Long-Term Debt was $5,924 Mil.
Total Current Assets was $206 Mil.
Total Current Liabilities was $435 Mil.
Net Income was 324.759 + 1017.686 + 367.017 + 226.139 = $1,936 Mil.

Revenue was 617.217 + 504.722 + 444.743 + 451.699 = $2,018 Mil.
Gross Profit was 403.366 + 316.963 + 294.271 + 292.352 = $1,307 Mil.
Total Assets at the begining of last year (Jun12) was $16,714 Mil.
Total Assets was $23,482 Mil.
Long-Term Debt was $5,476 Mil.
Total Current Assets was $391 Mil.
Total Current Liabilities was $712 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.

Equity Residential's current net income was 680. ==> 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.

Equity Residential's current cash flow from operations was 1,071. ==> 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 (Jun13)
=679.993/23482.383
=0.02895758

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=1935.601/16714.412
=0.11580431

Equity Residential's return on assets of this year was 0.02895758. Equity Residential's return on assets of last year was 0.11580431. ==> Last year is higher ==> Score 0.

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.

Equity Residential's current net income was 680. Equity Residential's current cash flow from operations was 1,071. ==> 1,071 > 680 ==> 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
=5923.952/22991.402
=0.25765945

Gearing (Last Year)=Long-Term Debt/Total Assets
=5475.954/23482.383
=0.23319414

Equity Residential's gearing of this year was 0.25765945. Equity Residential's gearing of last year was 0.23319414. ==> Last year is lower than this year ==> Score 0.

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
=205.809/434.52
=0.47364678

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=391.188/712.011
=0.54941286

Equity Residential's current ratio of this year was 0.47364678. Equity Residential's current ratio of last year was 0.54941286. ==> Last year's current ratio is higher ==> Score 0.

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.

Equity Residential's number of shares in issue this year was 377.1. Equity Residential's number of shares in issue last year was 373.4. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=1664.135/2546.385
=0.65352843

Gross Margin (Last Year)=Gross Profit/Revenue
=1306.952/2018.381
=0.64752492

Equity Residential's gross margin of this year was 0.65352843. Equity Residential's gross margin of last year was 0.64752492. ==> 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 (Jun13)
=2546.385/23482.383
=0.1084381

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=2018.381/16714.412
=0.12075693

Equity Residential's asset turnover of this year was 0.1084381. Equity Residential's asset turnover of last year was 0.12075693. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+0+0+1+0
=4

Good or high score = 8 or 9

Bad or low score = 0 or 1

Equity Residential has an F-score of 4 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.

Equity Residential Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 0110000101
Q4 1000111010
Q5 1111010111
Q6 0000111010
Q7 0001100000
Q8 0001001111
Q9 0011001101
F-score 4456556666

Equity Residential Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 1000111100
Q4 0111000011
Q5 1101111100
Q6 1001001000
Q7 0000000000
Q8 1111111111
Q9 0000011100
F-score 6557667644
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