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

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

Equity Residential has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

EQR' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 7

3
7

During the past 13 years, the highest Piotroski F-Score of Equity Residential was 7. The lowest was 3. 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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 221.744 + 217.739 + 182.522 + 286.42 = $908 Mil.
Cash Flow from Operations was 394.792 + 309.802 + 347.895 + 327.152 = $1,380 Mil.
Revenue was 664.078 + 664.66 + 666.371 + 679.112 = $2,674 Mil.
Gross Profit was 443.706 + 453.291 + 432.614 + 456.196 = $1,786 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(22991.402 + 23008.094 + 22950.614 + 23029.048 + 23081.83) / 5 = $23012.1976 Mil.
Total Assets at the begining of this year (Jun14) was $22,991 Mil.
Long-Term Debt was $10,828 Mil.
Total Current Assets was $248 Mil.
Total Current Liabilities was $489 Mil.
Net Income was 377.192 + 110.976 + 79.135 + 112.69 = $680 Mil.

Revenue was 626.629 + 639.134 + 633.442 + 652.568 = $2,552 Mil.
Gross Profit was 411.54 + 421.605 + 402.002 + 432.198 = $1,667 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(23482.383 + 23811.431 + 22834.545 + 22889.631 + 22991.402) / 5 = $23201.8784 Mil.
Total Assets at the begining of last year (Jun13) was $23,482 Mil.
Long-Term Debt was $5,924 Mil.
Total Current Assets was $206 Mil.
Total Current Liabilities was $435 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.

Equity Residential's current net income (TTM) was 908. ==> 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.

Equity Residential's current cash flow from operations (TTM) was 1,380. ==> 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.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Jun14)
=908.425/22991.402
=0.03951151

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=679.993/23482.383
=0.02895758

Equity Residential's return on assets of this year was 0.03951151. Equity Residential's return on assets of last year was 0.02895758. ==> This year is higher. ==> Score 1.

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.

Equity Residential's current net income (TTM) was 908. Equity Residential's current cash flow from operations (TTM) was 1,380. ==> 1,380 > 908 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=10827.907/23012.1976
=0.47052903

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=5923.952/23201.8784
=0.25532209

Equity Residential's gearing of this year was 0.47052903. Equity Residential's gearing of last year was 0.25532209. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=248.479/489.268
=0.50785868

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=205.809/434.52
=0.47364678

Equity Residential's current ratio of this year was 0.50785868. Equity Residential's current ratio of last year was 0.47364678. ==> 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.

Equity Residential's number of shares in issue this year was 380.5. Equity Residential's number of shares in issue last year was 377.1. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=1785.807/2674.221
=0.66778587

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1667.345/2551.773
=0.65340647

Equity Residential's gross margin of this year was 0.66778587. Equity Residential's gross margin of last year was 0.65340647. ==> 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 (Jun14)
=2674.221/22991.402
=0.11631396

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=2551.773/23482.383
=0.10866755

Equity Residential's asset turnover of this year was 0.11631396. Equity Residential's asset turnover of last year was 0.10866755. ==> 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+1+1+0+1+0+1+1
=7

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

Equity Residential has an F-score of 7. 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.

Equity Residential Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 1100001010
Question 4 0001110101
Question 5 1110101111
Question 6 0001110100
Question 7 0011000000
Question 8 0001011111
Question 9 0100010010
F-score 4546565665

Equity Residential Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 1111111111
Question 2 1111111111
Question 3 1111000001
Question 4 0000111111
Question 5 1111011110
Question 6 0010000011
Question 7 0000000000
Question 8 1111111111
Question 9 0111000011
F-score 5676455577
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