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Forest City Enterprises Inc (NYSE:FCE.A)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

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

Forest City Enterprises Inc has an F-score of 5 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: 5

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 (Sep14) TTM:Last Year (Jul13) TTM:
Net Income was 153.329 + 15.52 + -92.992 + 0.686 = $77 Mil.
Cash Flow from Operations was 9.93 + 19.921 + 75.279 + 66.029 = $171 Mil.
Revenue was 266.227 + 251.187 + 229.637 + 234.743 = $982 Mil.
Gross Profit was 55.972 + 80.084 + 93.889 + 98.352 = $328 Mil.
Average Total Assets from the begining of this year (Jul13)
to the end of this year (Sep14) was
(10728.101 + 9329.905 + 8946.808 + 8551.521 + 8208.93) / 5 = $9153.053 Mil.
Total Assets at the begining of this year (Jul13) was $10,728 Mil.
Long-Term Debt was $4,716 Mil.
Total Current Assets was $866 Mil.
Total Current Liabilities was $1,250 Mil.
Net Income was 58.468 + -19.591 + -19.368 + -16.281 = $3 Mil.

Revenue was 279.303 + 269.966 + 305.615 + 291.762 = $1,147 Mil.
Gross Profit was 104.71 + 85.699 + 97.811 + 100.358 = $389 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Jul13) was
(10672.751 + 10612.432 + 0 + 10583.186 + 10728.101) / 5 = $8519.294 Mil.
Total Assets at the begining of last year (Oct12) was $10,673 Mil.
Long-Term Debt was $6,815 Mil.
Total Current Assets was $1,247 Mil.
Total Current Liabilities was $1,724 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 (TTM) was 77. ==> 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 (TTM) was 171. ==> 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)/Total Assets at the Beginning of This Year (Jul13)
=76.543/10728.101
=0.00713481

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=3.228/10672.751
=0.00030245

Forest City Enterprises Inc's return on assets of this year was 0.00713481. Forest City Enterprises Inc's return on assets of last year was 0.00030245. ==> 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 (TTM) was 77. Forest City Enterprises Inc's current cash flow from operations (TTM) was 171. ==> 171 > 77 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Jul13 to Sep14
=4716.396/9153.053
=0.51528119

Gearing (Last Year: Jul13)=Long-Term Debt/Average Total Assets from Oct12 to Jul13
=6815.21/8519.294
=0.79997357

Forest City Enterprises Inc's gearing of this year was 0.51528119. Forest City Enterprises Inc's gearing of last year was 0.79997357. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=865.671/1250.018
=0.69252683

Current Ratio (Last Year: Jul13)=Total Current Assets/Total Current Liabilities
=1246.858/1723.849
=0.72329885

Forest City Enterprises Inc's current ratio of this year was 0.69252683. Forest City Enterprises Inc's current ratio of last year was 0.72329885. ==> 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 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 203.6. Forest City Enterprises Inc's number of shares in issue last year was 194.7. ==> 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: TTM)=Gross Profit/Revenue
=328.297/981.794
=0.33438481

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=388.578/1146.646
=0.33888227

Forest City Enterprises Inc's gross margin of this year was 0.33438481. Forest City Enterprises Inc's gross margin of last year was 0.33888227. ==> 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 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 (Jul13)
=981.794/10728.101
=0.0915161

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=1146.646/10672.751
=0.10743678

Forest City Enterprises Inc's asset turnover of this year was 0.0915161. Forest City Enterprises Inc's asset turnover of last year was 0.10743678. ==> 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+0+0+0+0
=5

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

Forest City Enterprises Inc has an F-score of 5 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 0000101000
Q9 0100100001
F-score 3645736645

Forest City Enterprises Inc Quarterly Data

Jul12Oct12Jan13Mar13Apr13Jul13Oct13Mar14Jun14Sep14
Q1 00111111
Q2 11111111
Q3 00111111
Q4 11111111
Q5 00000011
Q6 00011110
Q7 00000010
Q8 00000000
Q9 11111100
F-score 3350666475
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