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Forest City Enterprises Inc (NYSE:FCE.A)
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

Forest City Enterprises Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.

FCE.A' 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 Forest City Enterprises Inc was 8. The lowest was 3. And the median was 5.


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 (Jun14) TTM:Last Year (Apr13) TTM:
Net Income was -92.992 + 15.52 + 153.329 + -16.281 = $60 Mil.
Cash Flow from Operations was 75.279 + 19.921 + 9.93 + 43.709 = $149 Mil.
Revenue was 229.637 + 251.187 + 266.227 + 291.762 = $1,039 Mil.
Gross Profit was 93.889 + 80.084 + 55.972 + 100.358 = $330 Mil.
Total Assets at the begining of this year (Apr13) was $10,583 Mil.
Total Assets was $8,552 Mil.
Long-Term Debt was $5,044 Mil.
Total Current Assets was $1,204 Mil.
Total Current Liabilities was $1,275 Mil.
Net Income was -19.368 + -19.591 + 58.468 + -1.078 = $18 Mil.

Revenue was 305.615 + 269.966 + 291.62 + 291.366 = $1,159 Mil.
Gross Profit was 97.811 + 85.699 + 82.606 + 106.557 = $373 Mil.
Total Assets at the begining of last year (Jul12) was $10,733 Mil.
Total Assets was $10,583 Mil.
Long-Term Debt was $6,619 Mil.
Total Current Assets was $1,128 Mil.
Total Current Liabilities was $1,853 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.

Forest City Enterprises Inc's current net income was 60. ==> 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.

Forest City Enterprises Inc's current cash flow from operations was 149. ==> 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)
=59.576/10583.186
=0.00562931

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jul12)
=18.431/10732.853
=0.00171725

Forest City Enterprises Inc's return on assets of this year was 0.00562931. Forest City Enterprises Inc's return on assets of last year was 0.00171725. ==> 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.

Forest City Enterprises Inc's current net income was 60. Forest City Enterprises Inc's current cash flow from operations was 149. ==> 149 > 60 ==> 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
=5044.103/8551.521
=0.58984864

Gearing (Last Year)=Long-Term Debt/Total Assets
=6618.603/10583.186
=0.62538852

Forest City Enterprises Inc's gearing of this year was 0.58984864. Forest City Enterprises Inc's gearing of last year was 0.62538852. ==> 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
=1203.836/1274.992
=0.94419102

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1128.007/1853.355
=0.60862976

Forest City Enterprises Inc's current ratio of this year was 0.94419102. Forest City Enterprises Inc's current ratio of last year was 0.60862976. ==> 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.

Forest City Enterprises Inc's number of shares in issue this year was 198.3. Forest City Enterprises Inc's number of shares in issue last year was 222.5. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

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
=330.303/1038.813
=0.31796194

Gross Margin (Last Year)=Gross Profit/Revenue
=372.673/1158.567
=0.3216672

Forest City Enterprises Inc's gross margin of this year was 0.31796194. Forest City Enterprises Inc's gross margin of last year was 0.3216672. ==> 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)
=1038.813/10583.186
=0.09815693

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jul12)
=1158.567/10732.853
=0.10794586

Forest City Enterprises Inc's asset turnover of this year was 0.09815693. Forest City Enterprises Inc's asset turnover of last year was 0.10794586. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

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

Good or high score = 8 or 9

Bad or low score = 0 or 1

Forest City Enterprises Inc 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.

Forest City Enterprises Inc Annual Data

Jan04Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13
Q1 1111100101
Q2 1111111111
Q3 0101001101
Q4 1111111111
Q5 0011001110
Q6 0000101100
Q7 0100110010
Q8 0000111000
Q9 1000100001
F-score 4545746645

Forest City Enterprises Inc Quarterly Data

Apr12Jul12Oct12Jan13Mar13Apr13Jul13Oct13Mar14Jun14
Q1 00011111
Q2 11111111
Q3 00011111
Q4 11111111
Q5 10001111
Q6 00001111
Q7 00000001
Q8 00000000
Q9 01111100
F-score 3335077607
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