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Esterline Technologies (NYSE:ESL)
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 = 8 or 9
Bad or low score = 0 or 1

Esterline Technologies has an F-score of 7 indicating the company's financial situation is typical for a stable company.

ESL' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 7

3
8

During the past 13 years, the highest Piotroski F-Score of Esterline Technologies 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 (Apr14) TTM:Last Year (Apr13) TTM:
Net Income was 36.904 + 30.078 + 65.863 + 38.238 = $171 Mil.
Cash Flow from Operations was 34.529 + 49.923 + 54.493 + 73.595 = $213 Mil.
Revenue was 529.574 + 504.98 + 534.162 + 478.068 = $2,047 Mil.
Gross Profit was 182.345 + 173.295 + 205.373 + 178.902 = $740 Mil.
Total Assets at the begining of this year (Apr13) was $3,188 Mil.
Total Assets was $3,325 Mil.
Long-Term Debt was $649 Mil.
Total Current Assets was $1,139 Mil.
Total Current Liabilities was $388 Mil.
Net Income was 35.522 + 25.111 + 61.66 + -17.104 = $105 Mil.

Revenue was 499.562 + 457.962 + 530.656 + 485.949 = $1,974 Mil.
Gross Profit was 181.376 + 160.345 + 204.253 + 172.096 = $718 Mil.
Total Assets at the begining of last year (Apr12) was $3,328 Mil.
Total Assets was $3,188 Mil.
Long-Term Debt was $759 Mil.
Total Current Assets was $1,024 Mil.
Total Current Liabilities was $379 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.

Esterline Technologies's current net income was 171. ==> 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.

Esterline Technologies's current cash flow from operations was 213. ==> 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 (Apr13)
=171.083/3187.586
=0.05367165

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Apr12)
=105.189/3327.558
=0.03161147

Esterline Technologies's return on assets of this year was 0.05367165. Esterline Technologies's return on assets of last year was 0.03161147. ==> This year is higher. ==> Score 1.

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.

Esterline Technologies's current net income was 171. Esterline Technologies's current cash flow from operations was 213. ==> 213 > 171 ==> 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
=649.254/3325.414
=0.19524005

Gearing (Last Year)=Long-Term Debt/Total Assets
=758.586/3187.586
=0.23798134

Esterline Technologies's gearing of this year was 0.19524005. Esterline Technologies's gearing of last year was 0.23798134. ==> This year is lower or equal to last year. ==> Score 1.

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
=1138.824/388.16
=2.93390354

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1023.843/379.002
=2.70141846

Esterline Technologies's current ratio of this year was 2.93390354. Esterline Technologies's current ratio of last year was 2.70141846. ==> This year's current ratio is higher. ==> Score 1.

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.

Esterline Technologies's number of shares in issue this year was 32.5. Esterline Technologies's number of shares in issue last year was 31.7. ==> 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
=739.915/2046.784
=0.36150126

Gross Margin (Last Year)=Gross Profit/Revenue
=718.07/1974.129
=0.36374016

Esterline Technologies's gross margin of this year was 0.36150126. Esterline Technologies's gross margin of last year was 0.36374016. ==> Last year's gross margin is higher ==> Score 0.

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 (Apr13)
=2046.784/3187.586
=0.64211099

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Apr12)
=1974.129/3327.558
=0.59326659

Esterline Technologies's asset turnover of this year was 0.64211099. Esterline Technologies's asset turnover of last year was 0.59326659. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+1+1+0+0+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Esterline Technologies has an F-score of 7 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 Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1111111111
Q2 1111111111
Q3 1101010001
Q4 1101011111
Q5 1100100011
Q6 0011111011
Q7 0000000000
Q8 1000101111
Q9 0101010101
F-score 6636565568

Esterline Technologies Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
Q1 1111111111
Q2 1111111111
Q3 0000001111
Q4 1111111111
Q5 0011111111
Q6 0111111111
Q7 0010000000
Q8 0001111110
Q9 1000001111
F-score 4466668887
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