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E*Trade Financial Corp (NAS:ETFC)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

E*Trade Financial Corp has an F-score of 6 indicating the company's financial situation is typical for a stable company.

ETFC' s 10-Year Piotroski F-Score Range
Min: 1   Max: 6
Current: 6

1
6

During the past 13 years, the highest Piotroski F-Score of E*Trade Financial Corp was 6. The lowest was 1. And the median was 4.


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 (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 97 + 57.863 + 47.428 + -54.403 = $148 Mil.
Cash Flow from Operations was -143 + 228.583 + 618.923 + -189.424 = $515 Mil.
Revenue was 475 + 447.099 + 416.802 + 439.931 = $1,779 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Total Assets at the begining of this year (Mar13) was $44,966 Mil.
Total Assets was $46,438 Mil.
Long-Term Debt was $3,056 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was 35 + -186.059 + -28.625 + 39.51 = $-140 Mil.

Revenue was 420 + 467.656 + 490.035 + 452.408 = $1,830 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Total Assets at the begining of last year (Mar12) was $51,292 Mil.
Total Assets was $44,966 Mil.
Long-Term Debt was $3,031 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 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.

E*Trade Financial Corp's current net income was 148. ==> 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.

E*Trade Financial Corp's current cash flow from operations was 515. ==> 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 (Mar13)
=147.888/44966.314
=0.00328886

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=-140.174/51291.744
=-0.00273288

E*Trade Financial Corp's return on assets of this year was 0.00328886. E*Trade Financial Corp's return on assets of last year was -0.00273288. ==> 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.

E*Trade Financial Corp's current net income was 148. E*Trade Financial Corp's current cash flow from operations was 515. ==> 515 > 148 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=3056/46438
=0.06580817

Gearing (Last Year)=Long-Term Debt/Total Assets
=3031.394/44966.314
=0.06741478

E*Trade Financial Corp's gearing of this year was 0.06580817. E*Trade Financial Corp's gearing of last year was 0.06741478. ==> This year is lower. ==> 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
=0/0
=

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=0/0
=

E*Trade Financial Corp's current ratio of this year was . E*Trade Financial Corp's current ratio of last year was . ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

E*Trade Financial Corp's number of shares in issue this year was 293.8. E*Trade Financial Corp's number of shares in issue last year was 291.7. ==> There is more 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
=0/1778.832
=0

Gross Margin (Last Year)=Gross Profit/Revenue
=0/1830.099
=0

E*Trade Financial Corp's gross margin of this year was 0. E*Trade Financial Corp's gross margin of last year was 0. ==> 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 (Mar13)
=1778.832/44966.314
=0.03955921

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=1830.099/51291.744
=0.03568019

E*Trade Financial Corp's asset turnover of this year was 0.03955921. E*Trade Financial Corp's asset turnover of last year was 0.03568019. ==> 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+0+0+0+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

E*Trade Financial 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.

E*Trade Financial Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1110000101
Q2 1111111101
Q3 1010101101
Q4 1111111101
Q5 0010111110
Q6 0000000000
Q7 0101000010
Q8 0000000000
Q9 0000110000
F-score 4453544524

E*Trade Financial Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111000011
Q2 1111011111
Q3 1110000011
Q4 1111011111
Q5 1111111101
Q6 0000000000
Q7 0001101000
Q8 0000000000
Q9 0000000001
F-score 5555234346
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