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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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 88.337 + 3.205 + 13.634 + 16.412 = $122 Mil.
Cash Flow from Operations was 36.849 + 26.771 + 59.845 + 10.434 = $134 Mil.
Revenue was 301.61 + 282.625 + 257.547 + 266.936 = $1,109 Mil.
Gross Profit was 59.465 + 65.622 + 55.295 + 45.25 = $226 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(1608.828 + 1547.916 + 1326.807 + 1233.652 + 1267.848) / 5 = $1397.0102 Mil.
Total Assets at the begining of this year (Jun14) was $1,609 Mil.
Long-Term Debt was $696 Mil.
Total Current Assets was $417 Mil.
Total Current Liabilities was $112 Mil.
Net Income was -2.966 + -9.833 + 21.041 + 0.571 = $9 Mil.

Revenue was 269.218 + 282.682 + 305.685 + 285.192 = $1,143 Mil.
Gross Profit was 29.664 + 24.159 + 49.679 + 34.959 = $138 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(1528.084 + 1587.548 + 1548.559 + 1546.673 + 1608.828) / 5 = $1563.9384 Mil.
Total Assets at the begining of last year (Jun13) was $1,528 Mil.
Long-Term Debt was $902 Mil.
Total Current Assets was $558 Mil.
Total Current Liabilities was $179 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.

Mercer International Inc's current net income (TTM) was 122. ==> 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.

Mercer International Inc's current cash flow from operations (TTM) was 134. ==> 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 (Jun14)
=121.588/1608.828
=0.07557551

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=8.813/1528.084
=0.00576735

Mercer International Inc's return on assets of this year was 0.07557551. Mercer International Inc's return on assets of last year was 0.00576735. ==> 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.

Mercer International Inc's current net income (TTM) was 122. Mercer International Inc's current cash flow from operations (TTM) was 134. ==> 134 > 122 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=696.114/1397.0102
=0.49828842

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=902.019/1563.9384
=0.57676121

Mercer International Inc's gearing of this year was 0.49828842. Mercer International Inc's gearing of last year was 0.57676121. ==> This year is lower or equal to last year. ==> Score 1.

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: Jun15)=Total Current Assets/Total Current Liabilities
=417.367/111.798
=3.73322421

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=557.96/179.15
=3.11448507

Mercer International Inc's current ratio of this year was 3.73322421. Mercer International Inc's current ratio of last year was 3.11448507. ==> 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.

Mercer International Inc's number of shares in issue this year was 64.8. Mercer International Inc's number of shares in issue last year was 64.3. ==> 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
=225.632/1108.718
=0.20350711

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=138.461/1142.777
=0.12116187

Mercer International Inc's gross margin of this year was 0.20350711. Mercer International Inc's gross margin of last year was 0.12116187. ==> 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 (Jun14)
=1108.718/1608.828
=0.68914638

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=1142.777/1528.084
=0.74784959

Mercer International Inc's asset turnover of this year was 0.68914638. Mercer International Inc's asset turnover of last year was 0.74784959. ==> 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+1+1+0+1+0
=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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 0110011001
Question 2 1110111111
Question 3 0100110001
Question 4 1001111111
Question 5 1011011001
Question 6 1111011011
Question 7 0001001100
Question 8 1100110001
Question 9 1110010011
F-score 6654486348

Mercer International Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 0000011111
Question 2 1111111111
Question 3 0000111111
Question 4 1111110111
Question 5 1000011111
Question 6 0011111111
Question 7 0100000000
Question 8 0000111111
Question 9 0111111100
F-score 3444687877
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