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Mercer International Inc (NAS:MERC)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, 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

Mercer International Inc has an F-score of 8. 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: 8

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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was -2.996 + -9.432 + 21.041 + 0.571 = $9 Mil.
Cash Flow from Operations was 6.535 + -24.604 + 59.679 + 21.289 = $63 Mil.
Revenue was 274.092 + 263.174 + 305.685 + 285.192 = $1,128 Mil.
Gross Profit was 30.274 + 22.584 + 49.679 + 34.959 = $137 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(1528.084 + 1587.548 + 1548.559 + 1546.673 + 1608.828) / 5 = $1,564 Mil.
Total Assets was $1,609 Mil.
Long-Term Debt was $902 Mil.
Total Current Assets was $558 Mil.
Total Current Liabilities was $179 Mil.
Net Income was -12.54 + -6.601 + -0.561 + -13.015 = $-33 Mil.

Revenue was 288.283 + 239.043 + 261.785 + 274.7 = $1,064 Mil.
Gross Profit was 22.234 + 21.34 + 24.351 + 11.07 = $79 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(1552.338 + 1576.164 + 1560.581 + 1519.267 + 1528.084) / 5 = $1,547 Mil.
Total Assets was $1,528 Mil.
Long-Term Debt was $904 Mil.
Total Current Assets was $464 Mil.
Total Current Liabilities was $184 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Mercer International Inc's current net income (ttm) was 9. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

Mercer International Inc's current cash flow from operations (ttm) was 63. ==> 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)/Average Total Assets from Jun13 to Jun14
=9.184/1563.9384
=0.00587235

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=-32.717/1547.2868
=-0.02114475

Mercer International Inc's return on assets of this year was 0.00587235. Mercer International Inc's return on assets of last year was -0.02114475. ==> 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 9. Mercer International Inc's current cash flow from operations (ttm) was 63. ==> 63 > 9 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=902.019/1608.828
=0.56066839

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=904.061/1528.084
=0.59163043

Mercer International Inc's gearing of this year was 0.56066839. Mercer International Inc's gearing of last year was 0.59163043. ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=557.96/179.15
=3.11448507

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=464.346/183.928
=2.52460746

Mercer International Inc's current ratio of this year was 3.11448507. Mercer International Inc's current ratio of last year was 2.52460746. ==> 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 64.3. 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
=137.496/1128.143
=0.12187817

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=78.995/1063.811
=0.07425661

Mercer International Inc's gross margin of this year was 0.12187817. Mercer International Inc's gross margin of last year was 0.07425661. ==> 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 average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=1128.143/1563.9384
=0.72134746

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=1063.811/1547.2868
=0.68753317

Mercer International Inc's asset turnover of this year was 0.72134746. Mercer International Inc's asset turnover of last year was 0.68753317. ==> 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+1+1+1+0+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Mercer International Inc has an F-score of 8. 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, Altman Z-Score, Beneish M-Score


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 1010011000
Q4 0100111111
Q5 0001001110
Q6 1111101101
Q7 0000100010
Q8 0110001000
Q9 1111001000
F-score 5565338543

Mercer International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1100000001
Q2 1111111111
Q3 0000000011
Q4 1111111111
Q5 1111100001
Q6 1100001111
Q7 1111010000
Q8 0000000011
Q9 0000010111
F-score 6644343468
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