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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 (Jul14) TTM:Last Year (Jul13) TTM:
Net Income was 65.863 + 30.078 + 36.904 + 38.908 = $172 Mil.
Cash Flow from Operations was 54.493 + 49.923 + 34.529 + 50.263 = $189 Mil.
Revenue was 534.162 + 504.98 + 529.574 + 531.124 = $2,100 Mil.
Gross Profit was 205.373 + 173.295 + 182.345 + 182.473 = $743 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Jul14) was
(3224.911 + 3262.112 + 3270.335 + 3325.414 + 3308.458) / 5 = $3,278 Mil.
Total Assets was $3,308 Mil.
Long-Term Debt was $628 Mil.
Total Current Assets was $1,154 Mil.
Total Current Liabilities was $381 Mil.
Net Income was 61.66 + 25.111 + 35.522 + 38.238 = $161 Mil.

Revenue was 530.656 + 457.962 + 499.562 + 478.068 = $1,966 Mil.
Gross Profit was 204.253 + 160.345 + 181.376 + 178.902 = $725 Mil.
Average Total Assets from the begining of last year (Jul12)
to the end of last year (Jul13) was
(3202.026 + 3227.117 + 3235.404 + 3187.586 + 3224.911) / 5 = $3,215 Mil.
Total Assets was $3,225 Mil.
Long-Term Debt was $732 Mil.
Total Current Assets was $1,063 Mil.
Total Current Liabilities was $401 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Esterline Technologies's current net income (ttm) was 172. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Esterline Technologies's current cash flow from operations (ttm) was 189. ==> 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 (TTM)/Average Total Assets from Jul13 to Jul14
=171.753/3278.246
=0.05239174

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jul12 to Jul13
=160.531/3215.4088
=0.04992553

Esterline Technologies's return on assets of this year was 0.05239174. Esterline Technologies's return on assets of last year was 0.04992553. ==> 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 (ttm) was 172. Esterline Technologies's current cash flow from operations (ttm) was 189. ==> 189 > 172 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jul14)=Long-Term Debt/Total Assets
=628.119/3308.458
=0.18985249

Gearing (Last Year: Jul13)=Long-Term Debt/Total Assets
=732.444/3224.911
=0.22712069

Esterline Technologies's gearing of this year was 0.18985249. Esterline Technologies's gearing of last year was 0.22712069. ==> 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: Jul14)=Total Current Assets/Total Current Liabilities
=1153.594/380.68
=3.03035095

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=1062.835/400.705
=2.65241262

Esterline Technologies's current ratio of this year was 3.03035095. Esterline Technologies's current ratio of last year was 2.65241262. ==> 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 32.6. Esterline Technologies's number of shares in issue last year was 31.9. ==> 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: TTM)=Gross Profit/Revenue
=743.486/2099.84
=0.35406793

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=724.876/1966.248
=0.3686595

Esterline Technologies's gross margin of this year was 0.35406793. Esterline Technologies's gross margin of last year was 0.3686595. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Jul13 to Jul14
=2099.84/3278.246
=0.64053765

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jul12 to Jul13
=1966.248/3215.4088
=0.61150794

Esterline Technologies's asset turnover of this year was 0.64053765. Esterline Technologies's asset turnover of last year was 0.61150794. ==> 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, Altman Z-Score, Beneish M-Score


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 1101101001
Q4 1101011111
Q5 1100100011
Q6 0011111011
Q7 0000000000
Q8 1000101111
Q9 1111100010
F-score 7646746477

Esterline Technologies Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Q1 1111111111
Q2 1111111111
Q3 0000011111
Q4 1111111111
Q5 0111111111
Q6 1111111111
Q7 0100000000
Q8 0011111100
Q9 0011111111
F-score 4666688877
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