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Esterline Technologies Corp (NYSE:ESL)
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

Esterline Technologies Corp has an F-score of 6 indicating the company's financial situation is typical for a stable company.

ESL' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 8
Current: 6

3
8

During the past 13 years, the highest Piotroski F-Score of Esterline Technologies Corp was 8. 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 (Jul15) TTM:
Net Income was 2.986 + 5.084 + 14.973 + 29.356 = $52 Mil.
Cash Flow from Operations was 40.095 + 40.652 + 39.232 + 38.728 = $159 Mil.
Revenue was 331.808 + 441.477 + 490.31 + 517.092 = $1,781 Mil.
Gross Profit was 110.596 + 137.719 + 156.173 + 173.584 = $578 Mil.
Average Total Assets from the begining of this year (Jul15)
to the end of this year (Jun16) was
(3085.652 + 3007.03 + 2919.322 + 3012.04 + 3004.117) / 5 = $3005.6322 Mil.
Total Assets at the begining of this year (Jul15) was $3,086 Mil.
Long-Term Debt was $859 Mil.
Total Current Assets was $1,149 Mil.
Total Current Liabilities was $411 Mil.
Net Income was -3.472 + 8.319 + 19.81 + 28.497 = $53 Mil.

Revenue was 548.059 + 446.344 + 500.08 + 496.217 = $1,991 Mil.
Gross Profit was 193.577 + 145.35 + 163.651 + 169.796 = $672 Mil.
Average Total Assets from the begining of last year (Jul14)
to the end of last year (Jul15) was
(3308.458 + 3193.467 + 3083.39 + 3176.368 + 3085.652) / 5 = $3169.467 Mil.
Total Assets at the begining of last year (Jul14) was $3,308 Mil.
Long-Term Debt was $913 Mil.
Total Current Assets was $1,139 Mil.
Total Current Liabilities was $396 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.

Esterline Technologies Corp's current net income (TTM) was 52. ==> 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.

Esterline Technologies Corp's current cash flow from operations (TTM) was 159. ==> 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 (Jul15)
=52.399/3085.652
=0.0169815

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=53.154/3308.458
=0.01606609

Esterline Technologies Corp's return on assets of this year was 0.0169815. Esterline Technologies Corp's return on assets of last year was 0.01606609. ==> 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.

Esterline Technologies Corp's current net income (TTM) was 52. Esterline Technologies Corp's current cash flow from operations (TTM) was 159. ==> 159 > 52 ==> 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 Jul15 to Jun16
=858.753/3005.6322
=0.2857146

Gearing (Last Year: Jul15)=Long-Term Debt/Average Total Assets from Jul14 to Jul15
=912.809/3169.467
=0.28800079

Esterline Technologies Corp's gearing of this year was 0.2857146. Esterline Technologies Corp's gearing of last year was 0.28800079. ==> 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
=1148.549/410.547
=2.79760661

Current Ratio (Last Year: Jul15)=Total Current Assets/Total Current Liabilities
=1138.542/395.546
=2.87840605

Esterline Technologies Corp's current ratio of this year was 2.79760661. Esterline Technologies Corp's current ratio of last year was 2.87840605. ==> 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.

Esterline Technologies Corp's number of shares in issue this year was 29.6. Esterline Technologies Corp's number of shares in issue last year was 30.9. ==> 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
=578.072/1780.687
=0.32463426

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=672.374/1990.7
=0.33775757

Esterline Technologies Corp's gross margin of this year was 0.32463426. Esterline Technologies Corp's gross margin of last year was 0.33775757. ==> 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 (Jul15)
=1780.687/3085.652
=0.57708614

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=1990.7/3308.458
=0.60170025

Esterline Technologies Corp's asset turnover of this year was 0.57708614. Esterline Technologies Corp's asset turnover of last year was 0.60170025. ==> 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+1+1+1+0+1+0+0
=6

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

Esterline Technologies Corp 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.

Esterline Technologies Corp Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Sep15
Question 1 1111111111
Question 2 1111111111
Question 3 0101000100
Question 4 0101111111
Question 5 0010001110
Question 6 1111101110
Question 7 0000000001
Question 8 0010111100
Question 9 0100010110
F-score 3655556864

Esterline Technologies Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Sep15Dec15Mar16Jun16
Question 1 1111111111
Question 2 1111111111
Question 3 1100000001
Question 4 1111111111
Question 5 1110000001
Question 6 1111000000
Question 7 0001111111
Question 8 1000000000
Question 9 1111000000
F-score 8766444446
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