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Mercer International Inc (NAS:MERC)
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

Mercer International Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

MERC' s 10-Year Piotroski F-Score Range
Min: 1   Max: 9
Current: 7

1
9

During the past 13 years, the highest Piotroski F-Score of Mercer International Inc was 9. The lowest was 1. 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 (Sep13) TTM:
Net Income was -9.833 + 21.041 + 0.571 + 88.337 = $100 Mil.
Cash Flow from Operations was -23.165 + 59.679 + 21.289 + 36.849 = $95 Mil.
Revenue was 282.682 + 305.685 + 285.192 + 301.61 = $1,175 Mil.
Gross Profit was 24.159 + 49.679 + 34.959 + 59.465 = $168 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(1587.548 + 1548.559 + 1546.673 + 1608.828 + 1547.916) / 5 = $1567.9048 Mil.
Total Assets at the begining of this year (Sep13) was $1,588 Mil.
Long-Term Debt was $836 Mil.
Total Current Assets was $554 Mil.
Total Current Liabilities was $145 Mil.
Net Income was -6.601 + -0.561 + -13.015 + -2.966 = $-23 Mil.

Revenue was 239.043 + 261.785 + 274.7 + 269.218 = $1,045 Mil.
Gross Profit was 21.34 + 24.351 + 11.07 + 29.664 = $86 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(1576.164 + 1560.581 + 1519.267 + 1528.084 + 1587.548) / 5 = $1554.3288 Mil.
Total Assets at the begining of last year (Sep12) was $1,576 Mil.
Long-Term Debt was $932 Mil.
Total Current Assets was $500 Mil.
Total Current Liabilities was $199 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.

Mercer International Inc's current net income (TTM) was 100. ==> 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.

Mercer International Inc's current cash flow from operations (TTM) was 95. ==> 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 (Sep13)
=100.116/1587.548
=0.06306329

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=-23.143/1576.164
=-0.01468312

Mercer International Inc's return on assets of this year was 0.06306329. Mercer International Inc's return on assets of last year was -0.01468312. ==> 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.

Mercer International Inc's current net income (TTM) was 100. Mercer International Inc's current cash flow from operations (TTM) was 95. ==> 95 <= 100 ==> CFROA <= ROA ==> Score 0.

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 Sep13 to Sep14
=836.315/1567.9048
=0.53339654

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=932.371/1554.3288
=0.59985442

Mercer International Inc's gearing of this year was 0.53339654. Mercer International Inc's gearing of last year was 0.59985442. ==> 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
=554.13/144.721
=3.82895364

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=500.229/199.339
=2.50943869

Mercer International Inc's current ratio of this year was 3.82895364. Mercer International Inc's current ratio of last year was 2.50943869. ==> 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.

Mercer International Inc's number of shares in issue this year was 64.6. Mercer International Inc's number of shares in issue last year was 55.7. ==> 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
=168.262/1175.169
=0.14318111

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=86.425/1044.746
=0.08272346

Mercer International Inc's gross margin of this year was 0.14318111. Mercer International Inc's gross margin of last year was 0.08272346. ==> This year's gross margin is higher. ==> Score 1.

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 (Sep13)
=1175.169/1587.548
=0.74024155

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=1044.746/1576.164
=0.66284092

Mercer International Inc's asset turnover of this year was 0.74024155. Mercer International Inc's asset turnover of last year was 0.66284092. ==> 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+0+1+1+0+1+1
=7

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

Mercer International Inc 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 own currency.

Mercer International Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1011001100
Q2 1111011111
Q3 1010001000
Q4 0100111111
Q5 1101001110
Q6 1111101101
Q7 0000100010
Q8 0110001000
Q9 0111011001
F-score 5665338544

Mercer International Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1000000011
Q2 1111111111
Q3 0000000111
Q4 1111111110
Q5 1101000011
Q6 1000011111
Q7 1110100000
Q8 0000000111
Q9 0000111111
F-score 6433444687
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