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Key Energy Services Inc (NYSE:KEG)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

Key Energy Services Inc has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

KEG' s 10-Year Piotroski F-Score Range
Min: 2   Max: 9
Current: 2

2
9

During the past 13 years, the highest Piotroski F-Score of Key Energy Services Inc was 9. The lowest was 2. 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 (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was -11.899 + -52.196 + -62.229 + -52.304 = $-179 Mil.
Cash Flow from Operations was 45.694 + 61.574 + 18.816 + 38.084 = $164 Mil.
Revenue was 356.141 + 350.595 + 365.798 + 354.802 = $1,427 Mil.
Gross Profit was 97.839 + 87.712 + 93.686 + 88.448 = $368 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(2587.47 + 2551.627 + 2457.606 + 2406.646 + 2333.498) / 5 = $2467.3694 Mil.
Total Assets at the begining of this year (Dec13) was $2,587 Mil.
Long-Term Debt was $748 Mil.
Total Current Assets was $434 Mil.
Total Current Liabilities was $242 Mil.
Net Income was -0.274 + -4.128 + -4.848 + -12.518 = $-22 Mil.

Revenue was 428.449 + 411.39 + 389.673 + 362.164 = $1,592 Mil.
Gross Profit was 129.267 + 124.288 + 121.376 + 102.283 = $477 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(2761.588 + 2761.301 + 2732.437 + 2684.047 + 2587.47) / 5 = $2705.3686 Mil.
Total Assets at the begining of last year (Dec12) was $2,762 Mil.
Long-Term Debt was $764 Mil.
Total Current Assets was $506 Mil.
Total Current Liabilities was $232 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.

Key Energy Services Inc's current net income (TTM) was -179. ==> Negative ==> Score 0.

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.

Key Energy Services Inc's current cash flow from operations (TTM) was 164. ==> 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.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Dec13)
=-178.628/2587.47
=-0.06903578

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=-21.768/2761.588
=-0.00788242

Key Energy Services Inc's return on assets of this year was -0.06903578. Key Energy Services Inc's return on assets of last year was -0.00788242. ==> Last year is higher ==> Score 0.

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.

Key Energy Services Inc's current net income (TTM) was -179. Key Energy Services Inc's current cash flow from operations (TTM) was 164. ==> 164 > -179 ==> 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: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=748.426/2467.3694
=0.30332953

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=763.981/2705.3686
=0.28239442

Key Energy Services Inc's gearing of this year was 0.30332953. Key Energy Services Inc's gearing of last year was 0.28239442. ==> 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: Dec14)=Total Current Assets/Total Current Liabilities
=433.795/241.858
=1.79359376

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=506.153/232.344
=2.17846383

Key Energy Services Inc's current ratio of this year was 1.79359376. Key Energy Services Inc's current ratio of last year was 2.17846383. ==> Last year's current ratio is higher ==> Score 0.

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.

Key Energy Services Inc's number of shares in issue this year was 153.5. Key Energy Services Inc's number of shares in issue last year was 152.3. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=367.685/1427.336
=0.25760227

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=477.214/1591.676
=0.29981856

Key Energy Services Inc's gross margin of this year was 0.25760227. Key Energy Services Inc's gross margin of last year was 0.29981856. ==> Last year's gross margin is higher ==> Score 0.

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 (Dec13)
=1427.336/2587.47
=0.55163384

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=1591.676/2761.588
=0.57636259

Key Energy Services Inc's asset turnover of this year was 0.55163384. Key Energy Services Inc's asset turnover of last year was 0.57636259. ==> 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
=0+1+0+1+0+0+0+0+0
=2

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

Key Energy Services Inc has an F-score of 2. It is a bad or low score, which usually implies poor business operation.


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.

Key Energy Services Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111011100
Question 2 1111111111
Question 3 1100011000
Question 4 1111111111
Question 5 1100110110
Question 6 0100001010
Question 7 0011100000
Question 8 1110011000
Question 9 1100011000
F-score 7854477442

Key Energy Services Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1110100000
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 1111111110
Question 6 1011111000
Question 7 0000000000
Question 8 0000000000
Question 9 0000000000
F-score 5454544332
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