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Eaton Corp PLC (NYSE:ETN)
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

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

ETN' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Eaton Corp PLC was 9. 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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 532 + 404 + 491 + 523 = $1,950 Mil.
Cash Flow from Operations was 742 + 371 + 745 + 798 = $2,656 Mil.
Revenue was 5057 + 4813 + 5080 + 4987 = $19,937 Mil.
Gross Profit was 1630 + 1522 + 1661 + 1616 = $6,429 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(32201 + 31031 + 31583 + 31154 + 31237) / 5 = $31441.2 Mil.
Total Assets at the begining of this year (Sep15) was $32,201 Mil.
Long-Term Debt was $7,881 Mil.
Total Current Assets was $7,087 Mil.
Total Current Liabilities was $4,595 Mil.
Net Income was 581 + 466 + 535 + 446 = $2,028 Mil.

Revenue was 5565 + 5223 + 5372 + 5203 = $21,363 Mil.
Gross Profit was 1718 + 1630 + 1697 + 1606 = $6,651 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(34239 + 33529 + 32696 + 32579 + 32201) / 5 = $33048.8 Mil.
Total Assets at the begining of last year (Sep14) was $34,239 Mil.
Long-Term Debt was $7,830 Mil.
Total Current Assets was $7,579 Mil.
Total Current Liabilities was $5,100 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.

Eaton Corp PLC's current net income (TTM) was 1,950. ==> 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.

Eaton Corp PLC's current cash flow from operations (TTM) was 2,656. ==> 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.

Eaton Corp PLC's return on assets of this year was 0.06055713. Eaton Corp PLC's return on assets of last year was 0.0592307. ==> 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.

Eaton Corp PLC's current net income (TTM) was 1,950. Eaton Corp PLC's current cash flow from operations (TTM) was 2,656. ==> 2,656 > 1,950 ==> 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=7881/31441.2
=0.25065837

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=7830/33048.8
=0.23692237

Eaton Corp PLC's gearing of this year was 0.25065837. Eaton Corp PLC's gearing of last year was 0.23692237. ==> 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: Sep16)=Total Current Assets/Total Current Liabilities
=7087/4595
=1.54232862

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=7579/5100
=1.48607843

Eaton Corp PLC's current ratio of this year was 1.54232862. Eaton Corp PLC's current ratio of last year was 1.48607843. ==> 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.

Eaton Corp PLC's number of shares in issue this year was 455.6. Eaton Corp PLC's number of shares in issue last year was 466.4. ==> 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
=6429/19937
=0.32246577

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=6651/21363
=0.31133268

Eaton Corp PLC's gross margin of this year was 0.32246577. Eaton Corp PLC's gross margin of last year was 0.31133268. ==> 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 (Sep15)
=19937/32201
=0.61914226

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=21363/34239
=0.62393762

Eaton Corp PLC's asset turnover of this year was 0.61914226. Eaton Corp PLC's asset turnover of last year was 0.62393762. ==> 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+0+1+1+1+0
=7

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

Eaton Corp PLC 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 local exchange's currency.

Eaton Corp PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1000110001
Question 4 1111101111
Question 5 1000010110
Question 6 1001100100
Question 7 1100000001
Question 8 0100110111
Question 9 0010110010
F-score 7544763666

Eaton Corp PLC Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 0000111101
Question 4 1111011111
Question 5 1111110000
Question 6 0000000001
Question 7 0101111111
Question 8 1111111111
Question 9 0010000000
F-score 5666676657
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